Case for hiking retirement age

Image by Free-Photos from Pixabay

Earlier this year, the United Nations Population Fund released a report indicating that India’s population growth has slowed considerably between 2011 and 2019. The decline registered is sharper than estimates, and is only set to slow down further in the coming decades. According to the government, India will have 34 crore people above the age of 60 by 2050, more than the total population of the United States.

The current strength of our demographic dividend will soon turn into a disadvantage, rendering a huge chunk of our population dependant. The central government’s pension expenditure estimates for 2019-2020 fiscal year is 1.66 lakh crores, which is more than its salary expenditure. With the life expectancy also set to rise, our pension system will end up bearing the brunt of a rapidly ageing population.

Raising the age of retirement makes sense in this context. Policymakers should consider increasing the retirement age in a phased manner, signalling their intent to do so before the inevitable shift in demographics. Currently, the age of retirement for most government employees is 60 years. However, owing to increased life expectancy and people living
healthy post-retirement lives, it only makes sense to stretch the age of retirement gradually to the late 60s.

The Economic Survey also made a case for raising the age of retirement to improve the viability of the pension system, leverage a healthy older population, and increase female labour force participation among older age groups. At present, there is a stigma about older workers, most of which are based on fiction rather than fact. Multiple studies conducted on older workers’ productivity, attitudes and abilities found that the stereotypes about older workers have little basis in reality unless the job involves heavy physical labour. The only criteria employers need to focus on are their employees’ education, expertise, skillset, and willingness to learn and adapt. 

Older workforces have many advantages. Here are many of them listed.

1) Better at problem-solving: A study published in Frontiers in Aging Neuroscience revealed that the performance of older workers was more consistent over time compared to their younger peers, making them better at problem-solving. Their experience enables them to create more effective strategies, make better decisions, are more capable, and take fewer uncalculated risks.

2) Less cost: Recruitment costs are the highest recurring costs faced by any organisation. If the employee turnover is high, then employers need to continuously recruit and train new employees. Older workers have lower turnover rates, costing their employers less. Research has shown that people over the age of 50 are unlikely to change jobs compared to people in their 20s.

3)They don’t call in sick: According to a report by the insurance firm RIAS, older workers tend to call in sick less often than younger colleagues. The report revealed that only a quarter of the older workers called in sick in 2014, compared to half of the people in the age group of 20-30.

4)They learn fast: One of the most prevalent myths about older workers is that they have
trouble learning new things, which is far from the truth. They have higher motivation rates,
good attention spans, and tend to retain information longer than young people. 

5)They are just as focused on their careers: Old workers care about their jobs just as much as young people. They are interested in advancing their careers, taking up more meaningful work, are willing to take up challenges, and learn new skills. They are also motivated by more selfless causes like family and community, compared to younger workers who are motivated by the benefits they stand to get from the job, such as a better position or a pay hike.

A higher retirement age will motivate workers to invest in skill upgradation, allowing them to remain productive and healthy. It will also help save more money, and more importantly, improve the fiscal state of the economy through higher income tax revenues and better labour market incentives.

(The writer is Director and Creative Strategist, CHAI Kreative and Return of Million Smiles)

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