Insights on Retirement Policies, Corporate Age Criteria, and Taxation Implications

Dear seniors,

Is there a common retirement policy in the corporate world governed by laws? In case a worker attains an age of 60 (his retirement age as per his company's policy) on 15th May, what will be his date of retirement - 15th May or 30th/31st May?

Regards,
Atul

No, there is no common retirement policy. It differs depending on the type of employment, working sector, and region.

The date of retirement will be the last day of the month.

Dear BSSV,

"Date of retirement will be the last day of the month" (even if he completes the stipulated age criterion in the middle of the month). Is this binding by some law?

Regards,
Atul

Yes, Mr. Atul, it's a practice. There is no specific act, but it is always the last day of the month. Year and month are important in the case of superannuation, and the day is always the last day of the month.

But yeah, if his birthday is on the 1st, then the last day of the previous month; otherwise, the last day of the same month.

(Have you ever heard anyone saying that they retired on a particular day? You always hear that they retired in a specific month.)

Hi BSSV,

I think the retirement age is relative to the senior citizen's age under the Income Tax of India. I am not so sure about it. Let me know your opinion.

Vishwanath
"Yath Bhavam Tath Bhavathu"

As per PF rules, they consider pension from the age of 58 and not at 60. Also, if you are completing 58 years during the month, you have to consider not the month but the date. For example, if an employee is completing 58 years of age on the 15th of July, you have to take the date of retirement as 15th July and not 31st July. This is only for pension with PF authorities.

Many organizations take the employee's retirement on completion of their 60th birthday. So, 15th May could be right.

Thank you.

Hello Vishwanath,

The age of retirement is not the same everywhere. It differs from central government to state government. It also varies across different sectors and employments. Companies also have their own retirement policies.

Since PF is deducted from the basic pay, it is applicable until the retiring person's last drawn salary, i.e., 12% of the last drawn basic pay.

The income tax for senior citizens, very senior citizens, and very very senior citizens is provided to offer them the benefit of tax reductions. The percentage of tax varies among different age groups, so it has no direct connection with the PF deductions.

In fact, for government employees, their pension is fixed based on their last drawn salaries. For example, if you retire in May and receive a hike in May or the previous month, the increased salary is considered for the pension amount. Therefore, the last drawn salary is always taken into account for the final settlements.

(May observe the Tax Slabs: Income tax slab 2012-2013 | financeminister.in)

The main reasons behind such tax variations are the high cost of maintenance, such as medical expenses and dependency. Additionally, the salary they used to receive when they retired was meager in India.