INDIA: Retirement Age Seen Rising Globally

NEW DELHI (The Economic Times), December 5, 2007: While increasing life expectancy and cost of social security are forcing hikes in normal retirement age across the world, the latter is being driven by dearth of trained and experienced talent pool, according to a report by Mercer — Benefit Plans Around the World: A Guide for Multinational Employers (2007). In India, the normal retirement age is typically 58 or 60 according to employer’s choice, but the trend has been towards age 60. According to Mercer Retirement Benefits Consulting — India business leader Gautam Kakar, the country is witnessing a significant change in the average retirement age for executive directors of Indian conglomerates. Some organisations have raised the retirement age of full-time directors from 65 years to 70 years and this is not on account of increased longevity. “The primary reason is shortage of seasoned directors with cross functional experience who can take up this mantle as these organizations look to diversify from their core businesses,” he said. The study notes that the worldwide phenomenon will gain momentum. In Asia for instance, for company-sponsored retirement plans in Japan, the normal retirement age is gradually being extended from 60 to 65 between 2006 and 2013. The Singaporean government’s long-term objective is to increase the retirement age from 62 to 67 for men and women while in South Korea, the NRA will increase from 60 to 61 in 2013 and then further by one year every 5 years until it reaches a standard 65. Mercer study, that covered 47 countries, highlights the broad increase in social security retirement ages as national governments move to reduce their social security costs in response to increased longevity. According to Giles Archibald, Mercer’s global head of international retirement services, increase in state retirement ages is only part of the response. “Governments are increasingly looking to the private sector to supplement social security — placing more pressure on employer resources. However, as social security is eroded, innovative company-sponsored retirement plans are becoming a more attractive tool for companies to recruit the best talent and remain competitive,” he says. Europe and America face a bigger challenge with ageing workforce, the study says, specially the Western Europe with a history of generous social security provision. In Austria, the retirement age for women will be gradually raised from 60 to 65 between 2024 and 2033. In Belgium, the NRA for women will be raised from 64 to 65 starting 2009. Retirement ages for men and women in the Czech Republic have been increasing by two months and four months every year respectively since 1996. By 2013, the aim is to reach the target retirement age of 63 for males and 59 - 63 for females, depending on the number of children raised. Denmark will increase the NRA age for men and women from 65 to 67 between 2024 and 2027. Germany, too, is increasing the age for men and women from 65 to 67 between 2012 and 2029. “In western Europe, passing pension legislation faces the enormous challenge of politicians seeking to retain the support of their voters. Recent strikes and disturbances in France have highlighted the sensitivities involved but also underline the seriousness of the issue,” says Yvonne Sonsino, head of Mercer’s international retirement business in the UK. Copyright © 2007 Times Internet Limited.