Friday, December 28, 2007

A 40% hike and retire at 62?

The government is considering an increase in the retirement age of government employees to 62 years from 60. The proposal, that would benefit a large number of central and state government employees, is being looked into by the Sixth Pay Commission.

Some senior bureaucrats have already given presentations to the commission, explaining how a hike in retirement age would help the government in postponing its pension liabilities by two years. If the proposal goes through, an announcement in this regard can be expected in the Budget, sources said.

A number of ministries had written to the department of personnel and training (DoPT) about increasing the retirement age for select categories. DoPT forwarded the proposals to the ministry of finance, which in turn asked the Sixth Pay Commission to look into it.

The commission asked top bureaucrats to make presentations. It is understood that some state governments are in support of increase in retirement age. If the Centre decides to go ahead with the proposal, various state governments will also have to follow suit.

The Sixth Pay Commission's recommendations are expected to result in a hike of about 40% in salaries of central government employees in various categories.

Sources said if the government decides to implement the Sixth Pay Commission's recommendations, the outgo on the pension would be substantially higher, putting pressure on the fiscal situation. Raising the age would, however, help the government in postponing this liability by two years.

The government had last raised the retirement age in 1998 to 60 from 58 years. In the current fiscal, the total outgo on account of pay and allowances for the government with an employee strength of over 3 lakh has been pegged at Rs 46,379 crore. - The Economic Times