Retirement is special for many. After working for decades, people can free themselves from their professions and spend time with their loved ones or pursue their interests. But, not everyone has a clear idea of India’s retirement age.
Being cognizant of India’s retirement age is necessary, even if we have just started our careers. It helps with future planning and better financial planning from the very beginning of our professional journey.
For example, our savings, investments, taxes, expenses and monthly instalments (EMIs) can vary significantly if we retire at 60 instead of 62. So, to help you make better-informed decisions, we have provided in-depth information about the various aspects of India’s retirement age.
We have talked about the retirement age in India for private companies, the retirement age in India for government employees, and other crucial retirement-related information. Read on to find out.
- India’s retirement age is not fixed.
- The retirement age in India varies with role, organisation and sector.
- The retirement age in India’s private sector and public sector is different.
- The average retirement age falls between 58-60.
- Employees are entitled to a pension, gratuity and other retirement benefits.
- Even in the private sector, employees can receive a pension after retirement.
Learn the basics
Retirement is defined as the action of withdrawal from one’s working position and active working life. India’s retirement age varies from individual to individual and depends on the role, the type of organisation, and the sector in which the individual is employed.
There are various sectors in India where people are employed. Most formal employees i.e., the employees who are working in the organised sectors, are either employed by the government-owned public sector or the private sector. The retirement age and the associated benefits for each sector vary considerably.
Moreover, the government keeps enacting new laws to amend existing retirement policies. New amendments can prove beneficial to the retiring workers, employers, and other stakeholders involved.
Thus, being abreast with India’s latest retirement age, criteria, benefits, and other things can get overwhelming for individuals. Therefore, to help you out, we have prepared a detailed guide regarding the retirement age in India.
Did you know?
Most millennials prefer to retire between the ages of fifty to sixty. However, millennials employed in the social sector have no plans of retiring.
Understanding India’s retirement age
There is immense confusion regarding India’s retirement age. This can be attributed to the diverse sectors, job roles, organisations, and ever-changing laws.
For example, earlier, the government retirement age in India was 58. Then, it was increased to 60 by the government. Currently, the new retirement age in India is 62 for central government employees. The retirement age for state government employees varies from 58 and 62, depending on the state rules and regulations.
Thus, to clear the confusion, let’s take a detailed look at India’s various retirement ages, pension age in India, and other associated factors related to retirement.
Retirement age in India for private companies
There is no fixed retirement age in India’s private sector. The retirement rules vary from organisation to organisation. Similarly, the pension and other retirement benefits, too, differ among organisations.
Individuals can opt to work for as long as they wish, depending upon mutual agreement between them and their employer.
However, on average, the retirement age in India’s private sector is within 60-65 years.
Did you know?
Employees in the private sector don’t get a pension from their employers as government employees do. However, the government has formulated various social security schemes like the National Pension Scheme and Employees’ Provident Fund to help retired individuals from the private sector receive monthly pensions.
Retirement age in India for government employees
The Union government’s retirement age in India is 60 years. However, the latest Union government order has increased the retirement age. The new retirement age in India is 62 years.
Individuals can also opt to retire before attaining the retirement age. In such cases, they have to opt for Voluntary Retirement Scheme (VRS). However, to avail of the benefits of a retired person, they need to meet certain criteria.
Did you know?
The old pension scheme for government employees was abolished in December 2003. The National Pension Scheme’s substitute took effect from 1st April 2004. The new scheme was mainly aimed at providing social security to unorganised private-sector employees.
Word to remember
VRS stands for Voluntary Retirement Scheme. Employees can retire from their work before they attain India’s retirement age by law. However, such employees need to have completed ten years of service or be above 40 to opt for VRS. They are entitled to all the benefits of a retired person, such as pension and provident fund.
Individuals opting for VRS cannot work with the same company or another firm managed by the same company group. However, the person can take up employment with another company.
The retirement age for individuals employed in different sectors varies significantly. For example, the retirement age in India for government employees is 60. The proposed new retirement age in India is 62. Moreover, the government’s retirement age in India differs for central and state government employees.
Similarly, there is no definitive retirement age in India’s private sector. It depends upon the individual and varies from company to company. Individuals can choose to work even in their seventies and eighties.
Then, people can also take voluntary retirement at an early stage of life while being entitled to all the benefits of a retired person (subject they meet the criteria).
In a nutshell, there is no single answer for India’s retirement age as it varies based on several factors.
Frequently asked questions
Private sector employees aren’t entitled to pensions like their government counterparts. However, they can opt for the Employee Pension Scheme and National Pension Scheme, providing them with a pension after retirement.
VRS stands for Voluntary Retirement Scheme. Individuals can opt for VRS before they attain India’s retirement age and stop working for the company if they fulfil some criteria. However, they can take up employment with a company or group not associated with the same employer.
The government introduced a new retirement age in India for several reasons, such as providing social security to senior citizens, an increase in life expectancy, and the utilisation of the skills and experience of experienced employees.
Individuals are eligible for pensions after they have completed ten years of service. However, to be eligible to claim the pension, they need to attain the age of fifty or fifty-eight.
The government has made many proposals to introduce a new retirement age in India for defence personnel. However, none has been officially accepted. India’s retirement age for defence personnel varies from 42 to 57 years.
Read more about Early Retirement Plan.