Considering Raising Retirement Age to 62: What Are the Pros, Cons, and Legal Implications?

Dear Friends,

Our company has a policy of retirement age at 60 years. Now, we want to increase this age by 2 years. Kindly suggest the pros and cons of increasing this age, particularly if there are any legal requirements.

HK

It should be made optional. If anyone is unwilling to serve after the normal retirement age as prescribed by the government, you cannot force them to continue beyond that period.

Mr. Kutty,

In India, the normal retirement age is 58 or 60. There is no government rule for private sectors. However, when the company mentions the retirement age in the appointment letter, they cannot arbitrarily increase or decrease the retirement age, which can only be done on mutual consent.

So, a clause can be added while implementing the increased retirement age. Those who are already in service may either retire upon attaining the age of 60 years, or they may opt for the revised retirement age of 62 years. A time limit to exercise the option can be given to all existing employees with a clause that once the option is exercised, it cannot be withdrawn or amended. For all employees joining the organization after the implementation of the new retirement age, the retirement age can be set at 62. Additionally, anyone wishing to take voluntary retirement can also be permitted.

One more thing. If there is a provision regarding retirement age in the certified standing orders or service rules, it has to be amended after following the proper procedure.

Mr. Kutty,

I am in one of the top industrial houses. It is clearly mentioned in the appointment letter that after attaining 58 years, the service can be extended by mutual agreement up to the age of 65 years subject to medical fitness. There is no ambiguity on this. If I am willing to serve, I will do so after 58 years; otherwise, I will retire on my own.

I think if the age is increased, then absenteeism will also be on the higher side. Moreover, it's now time for the young and jobless to get opportunities. Think about it.

Hi,

The retirement age as per EPF Rules is 58 years. However, a private company can define its own retirement age. But then to have a higher age for retirement has its pros and cons.

1. The good thing is that the company can utilize the services of a very experienced senior person for a longer time. However, the management should not worry too much about his quality of work output as, due to the aging process, a person could become slower and may not be able to achieve the same targets as a younger person.

2. The employee may be susceptible to health problems and efficiency may not be as expected compared to a younger person.

3. Suppose you were to increase the retirement age to a higher level, then you would be stuck with employees who do not deliver at the required pace. If you decide to set lower targets for them, it could lead to dissatisfaction among workers in the same category.

Hence, to avoid all these problems, it is better to consider hiring retired persons on a contract basis to be renewed annually as consultants. This way, you can still benefit from their knowledge and skill sets without strictly employing them.

Think it over.

Regards

Is there any legal requirement that the employee should be informed about their retirement in advance? If the appointment order mentions the retirement age as 55 years, do we need to inform them in advance about retirement?

The retirement age is generally mentioned in the Appointment Letter and also figures in the Standing Orders of the company wherever applicable. However, retiring employees at the age of 60 is advisable. Extending the retirement age may hinder employment opportunities for the next generation of aspirants.

I suggest adhering to the prescribed retirement age in your company's rules. You may offer Annual Post-Retirement Contracts based on organizational needs.

Vasant Nair

1. Retirement age can be increased by amending either the certified standing orders or the disciplinary rules framed in this regard. If no such rules exist, make it clear in the appointment letter itself.

2. There is always a risk in increasing the age of retirement:
- Slackness creeps in.
- The younger generation in the hierarchy will not be happy.
- Even after increasing the age by 2 years, at one point, they have to retire, and we have to find a replacement. So, it is better to do so at the earliest.
- After some time, especially in stressful jobs, people will start noticing things; their sharpness decreases.
- There tends to be complacency or an "enough is enough" attitude.

In case individuals are very competent, they may be taken on contract for a period of 1-2 years. However, their services are to be utilized only in rare circumstances; otherwise, the lower-ranking employees will depend on them, and they may shift the responsibility.

In my 30 years of service, I have followed this approach:
a. If people retire, allow them to go in peace rather than extending their service.
b. If people resign, relieve them immediately rather than retaining them by offering extras.

In both the above cases, care should be taken to ensure they do not join our competitors.

Nagaraj
nagaraj1946@gmail.com

Can anyone tell me what is the difference between superannuation and retirement? What are the benefits given/offered both statutory and practiced.

Retirement and Contract Employment

A simple reading of the Industrial Employment Standing Orders will provide you with this information: Retirement or superannuation shall occur upon the completion of 58 years. There is no restriction on retaining an employee on contract after retirement. The conditions of the contract can vary according to company requirements.

Generally, contract jobs can easily save companies costs, time, and money in searching for and training new employees, thereby causing a paradigm shift in HR management. While offering contract jobs, employers are usually considerate of the consultants' needs and offer adequate variable and fixed bonuses, benefits for family, and other allowances, thereby making a contract job competitive and attractive for retired professionals.

Is there a legal implication on increasing the retirement age? We would like to increase it to 70. What should be the procedure that we have to follow for the same.