Retiring at 55 or 60?
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A 2021 budget proposal to extend the retirement age in the private sector to 60 years and allow private sector workers to access their Employees’ Provident Fund (EPF) only after 60 years has triggered a storm of protests – from both employers and unions – with the ‘most practical age of retirement’ issue surfacing again.Private sector employers have expressed opposition to the move, while unions representing workers say that if there are no proper laws to extend the minimum age of retirement, it is not workable and in such a situation being asked to access EPF funds only at 60 years is a violation of one’s fundamental rights. The EPF Act stipulates that a member of the Fund shall be paid the total amount lying to the credit of such individual as soon as may be practicable when “such a member, being a male, attains the age of fifty-five years, or, being a female, attains the age of fifty years”.
It is widely acknowledged that efficient workers who reach the age of retirement in the private sector – 55 years – are still very active at this age and beyond, while on the other hand it is stated that if this retirement age is extended, it mars the chances of younger people coming up the ladder of promotion and reaching the top. In the public sector, the retirement age is 60 years.
No decision on this matter was made at the tripartite National Labour Advisory Council (NLAC) meeting two weeks ago although it came up for discussion. The NLAC represents the workers (through trade unions), the employers (via the Employers Federation of Ceylon – EFC) and the government (Ministry of Labour).
As I was contemplating on these issues, the phone rang. It was Kalabala Silva, the often agitated academic, on the line.
“I say…I read a story where the private sector is opposed to the proposed new retirement age of 60 years. That is very unfair because 60 years is still an age when people are active and productive and this is the retirement age in most countries. Why can’t we go with the general overseas flow?” he asked.
“Interestingly, I am writing about the retirement age dilemma that the country is facing at the moment. The private sector also has a point as they say that extending the retirement age would deprive younger people from climbing the corporate ladder,” I said.
“Yes… but younger people should be able to rise in a firm based on merit and performance; not because an older employee has been given five years more in the job before retirement,” he argued.
We discussed many other issues and after wishing him for the New Year, I ended the call and looked towards the margosa tree where the trio of friends was engrossed in conversation.
“Mage yaaluwekge mahaththaya paudgalika companiyaka weda karanne. Eya mata kiwwa, katahwak thiyenawa kiyala vishrama yana vayasa hetak karanna. Eeeta passe thamai egollanta EPF mudal ganna puluwan (My friend whose husband works in a private company was saying that there is a proposal where the new retirement age is 60 years and that they can get their EPF money only after that),” said Kussi Amma Sera.
“Eka hari asadaranai. EPF mudal ganna puluwan venna ona den thiyena vidihata vayasa 55 wena-kota (This is very unfair. They should allow people access to the EPF at the present age of 55 years),” noted Mabel Rasthiyadu.
“Mata therenne ne. Ogollo katha karanne sevakayek companiyakin aswenna avashya vayasada nethnam vayasata gihilla aswena welawa genada (I don’t understand this. Are you referring to the age when a person leaves a company or when he gets old and has to leave),” asked Serapina.
“Companiyakata weda karanna puluwan wedima vayasa (It’s the maximum age you can work in the company),” answered Kussi Amma Sera.
The most productive age of retirement has become a thorny issue particularly in the private sector. There is no mandatory retirement age in the private sector though most companies use 55 years as the benchmark.
There are, however, two schools of thought from the corporate sector. “In my view, the private sector should be left alone to decide this. Why would a corporate head want to retire a productive senior manager? He can always offer him fresh contracts to retain his services. If the retirement age is statutorily increased to 60 years, corporates would be forced to retain unproductive staff as well,” said the chairman of a publicly-listed company.
A contrary view came from the head of a large family-owned company who is turning 55 years this year: “Fifty-five years is certainly far too early for both men and women to retire. The official age should be 65 with the option of early retirement being given to the individual. I am still learning and enthusiastic to go on. If I was forced to leave, the organisation would be the loser and I wouldn’t be able to find another job with age being a barrier. So it’s a disaster for both parties!”
Globally, Sri Lanka has the earliest retirement age at 55 years (in the private sector), while Libya provides for the oldest retirement age (70 years), according to Wikipedia data.
In a list of retirement ages of nearly 90 countries, it was revealed that only three countries – Sri Lanka, Indonesia (58 years) and Bangladesh (59 years) – have retirement ages lower than 60 years. In Australia, the retirement age is 65 and expected to increase gradually to 67 years by July 2023. In Denmark, it is 65 with plans to increase gradually to reach 67 years by 2022. In Finland, it is 62–68 (flexible retirement age) while in France too it is flexible (62-67) with the full retirement age expected to increase gradually from 65 to 67 years by 2023. In India, it is 60-65 years.
In Japan, it is 62; the Netherlands – 68; Norway – 67; Pakistan – 60; Russia – 60 for men and 55 for women; Singapore – 62–65 years; UAE – 65; the UK – 65; and the US – 62-67 years.
The only way the government can enforce a retirement age of 60 years is through a National Retirement Age Act which is bound to draw vehement protests from the private sector and could be a disincentive to foreign investors.
On the positive side, the fact that the government has thrown its hat into this ring of controversy means that a new age of retirement is bound to emerge from the discussions, while at the same time ensuring workers are able to withdraw their EPF emoluments at age 55 and are also given the option of retiring at that age.
In the now routine practice before I end my column, Serapina walked into my room with a mug of coffee (which I had requested) asking, “Sir, weda ivarada (Sir, you finished your work?)”
I answered in the affirmative, while hoping that the retirement age issue would be resolved to the satisfaction of both workers and employers.