“The attention of the government has been drawn to reports appearing in some sections of the media regarding raising the retirement age of Central government employees from 60 to 62 years. In order to put at rest all such speculation, it is being clarified that there is no such proposal before the government,” the Department of Personnel and Training of the Ministry of Personnel, Public Grievances and Pensions said in a statement here.

It may be noted that there were suggestions from various quarters to the government to increase the retirement age of its employees by two years as a part of exercise to reduce the pension burden for time being. The reasoning was a rise in retirement age by two years would aid the government in postponing its pension liabilities by two years. The Department of Personnel (DoP) was understood to have received a recommendation from a number of ministries to increase the retirement age for selected categories.

The DoP forwarded the proposals to the Finance Ministry, which in turn was understood to have asked the Sixth Pay Commission to look into it, sources said.

The mounting burden of pension, no doubt, is increasingly straining the finances of the government. As per an estimate, the pension burden on the Centre was a huge Rs 28,000 crore in 2004-05, up from Rs 5,300 crore or so in 1993-94. For the states, the pension bill is bigger: roughly Rs 39,000 crore in 2004-05. To reduce the pension burden, the Centre introduced a New Pension Scheme (NPS) under which from January 1, 2004 all new employees of the Central government were mandated to contribute 10 per cent of their salary to a defined contribution scheme, with a matching contribution from the government as employer.

Now the Centre has to pay matching contributions for those employees joining after January 1, 2004 under the NPS, while maintaining payments under the older scheme for employees in place up to the end of 2003.

As per an estimate, the Centre’s payments to maintain the old pension scheme alone will approximately touch Rs 27,600 crore a year by March 2010. The retirement age for the Central government employees was last revised in 1998 from 58 years to 60 years.