The Economic Survey 2018-19

Economic Survey 2018-2019 proposes to raise retirement age

Retired pensioners from across India protest against undue delay in the constitution of a high-level committee to revamp the Employees' Pension Scheme (EPS) 1995. Picture for representational purposes.

Retired pensioners from across India protest against undue delay in the constitution of a high-level committee to revamp the Employees' Pension Scheme (EPS) 1995. Picture for representational purposes.   | Photo Credit: V.V. Krishnan

India may have to raise the retirement age as the country sees a rapid increase in the size of the elderly population over the next two decades due to the slowing down of population growth rate, according to the Economic Survey 2018-2019.

It is forecast that the population rate will grow less than 1% during 2021- 31 and under 0.5% during 2031-41. This is primarily due to the fall in total fertility rate (TFR) which is projected to decline between 2021-2041 and fall below replacement level fertility at 1.8 as early as 2021.

The total fertility rate of 2.1 is called the replacement level fertility below which populations begin to decline. For India, the effective replacement level fertility is slightly higher than the normal benchmark due to the skewed gender ratio and is at 2.15-2.2. The current TFR in 14 out of the 22 major States is already below the effective replacement level fertility.

At the State level, southern States as well as West Bengal, Punjab, Maharashtra and Himachal Pradesh have below replacement level fertility and will see TFR decline to 1.5-1.6 by 2021. And by 2031, all States are likely to see below replacement level fertility.

The size of the elderly population, 60 years and above, is expected to nearly double from 8.6% in 2011 to 16% by 2041, whereas the population size of those between 0-19 years, which is on the decline, is likely to drop from as high as 41% in 2011 to 25% by 2041.

This will throw new policy challenges such as provision for health and old-age care, access to retirement-related financial services, public pension funding, and retirement age, states the survey.

“Increasing the retirement age for both men and women going forward could be considered in line with the experience of other countries. This will be key to the viability of pension systems and would also help increase female labour force participation in the older age-groups,” it suggests.

Many countries like the U.S., Germany and France have already raised the retirement age to reduce the burden on pension funding.

At the same time, the working-age population is expected to see a large increase leading to India’s demographic dividend peaking around 2041, when the share of those in the age group of 20-59 is expected to hit 59%.

The survey highlights that this will mean additional jobs will have to be created to keep pace with annual increase in working-age population of 9.7 million during 2021-31 and 4.2 million during 2031-41.

Related Topics
This article is closed for comments.
Please Email the Editor

Printable version | Sep 20, 2020 6:43:54 AM | https://www.thehindu.com/business/budget/retirement-age-set-to-rise-due-to-higher-life-expectancy/article28282037.ece

In This Package
Economic Survey: Aadhaar aided MGNREGS beneficiaries
FDI needed to spur the virtuous cycle in India, says CEA Krishnamurthy Subramanian
Survey calls for tax cuts, space for hotels in infra boost to tourism
Economic Survey moots central welfare database of citizens
India could host ‘Detroit’ of EVs
‘Reward top taxpayers, shame defaulters’
Well-designed minimum wage system required to reduce wage inequality, says Economic Survey 2018-19
Economic Survey 2018-19: Private funds needed for Swachh Bharat
Economic Survey 2018-19 calls for improvement in contract enforcement regime
‘Recovery under IBC higher at 43%’
More than half of start-ups are from tier-2 and tier -3 cities: Survey
Economic Survey: shift focus to water productivity
Economic Survey 2019 in six charts
India must spend $200 billion on infra annually; harnessing pvt. investment a challenge: Economic Survey
No train collisions in 2018-19, fire incidents rise: Economic Survey
Finance Ministry makes progress in strategic sale of 28 Central Public Sector Enterprises
Economic Survey lays out blueprint for $5 trillion economy
Read: Full text of Economic Survey 2019
India needs to increase energy consumption to raise per capita income: Eco Survey
Economic Survey calls for enhanced efficiency in judiciary to help improve ease of doing business
India’s march towards SDGs anchored in investing in human capital, inclusive growth: Economic Survey
Debt recovery mechanism strengthened with IBC, says Economic Survey
You are reading
Economic Survey 2018-2019 proposes to raise retirement age
Gross tax to GDP ratio dips to 10.9% in FY’19
Economic Survey suggests merging of different datasets held by govt
Economic Survey: Many states became open defecation free since launch of Swachh Bharat
Next Story