The pension body Employees’ Provident Fund Organisation (EPFO) finds merit in considerably raising the retirement age in India to align with life expectancy to ensure the viability of the pension system and offer adequate retirement benefits, reported The Economic Times.
India is expected to be an ageing society by 2047 with an estimated 140 million people above the age of 60 years. This is expected to put immense pressure on the pension funds in the country.
“Increasing the retirement age, going forward, could be considered in line with the experience of other countries and will be key to the viability of pension systems,” EPFO said in its Vision 2047 document.
“Raising the retirement age would mean deposit of higher quantum pensions for longer duration with EPFO and other pension funds in the country and will help offset inflation,” a senior government official said, ET reported.
The vision document has been shared with the states and discussions will soon start with other stakeholders including the employers and the employees as well. EPFO is the custodian of a cumulative pension and provident fund corpus of over ₹12 lakh crore of its nearly 60 million subscribers.
The EPFO is likely to rope in the Pension Fund Regulatory and Development Authority, which administers the National Pension Scheme of the government, in this comprehensive plan.
India’s elderly population (aged 60 and above) is projected to touch 194 million in 2031 from 138 million in 2021, a 41% increase over a decade, according to the National Statistical Office (NSO)’s Elderly in India 2021 Report.
“Consequently, the number of people requiring old age income and health security will go up exponentially,” EPFO added.
In India, the retirement age varies between 58 to 65 years depending on whether it is a public sector enterprise or a corporate entity. However, across the European Union, the retirement age is 65 years, while it is 67 in Denmark, Italy and Greece, and 66 in the US. Most of them have an ageing population.