Why The Eighth Pay Commission Must Increase The Retirement Age To 65 Years In Three Phases, In The Next Ten Years
Rajiv Upadhyay 
The government has announced its intentions to set up the eighth pay commission in January but has not finalised its terms of reference till now . This has lead to certain apprehensions particularly because of a new legislation having been passed, permitting differentiation between old and new retirees . It amounts to different pension fixation between old and new retirees . This was strongly rejected by Supreme Court after sixth pay commission and government was asked to give same pension to old and new retirees of same rank . Therefore this act of government irrespective of public denials has raised serious concern in retired government servants .
In the last fifteen years the number of pensioners has increased from about 45 lakh to 64 lakh ( serving employees about 44 lakh ) . Government is expected to state shortage of funds and need for more welfare measures for poor . However it is only a facade . It all started with call for voluntary surrender of subsidised gas cylinder by middle class in 2014-15. This exclusion of salaried middle class however later became a habit particularly after introduction of GST in 2017 . More and more items were included in GST . Service class paid on an average three times more income tax than non service class ( Rs 75000 vs 25000) as shopkeepers , lawyers , Chartered Accountants , doctors and other professional declared much less income . The government can make poor people’s life better by higher growth and development not by making salaried middle class poor by over taxation . In the last ten years national government has written off about 12 lakh crore rupees loans , GDP has gone up by 65 % , why grudge a small share being spent on highly taxed service class .
The income tax limit revision in last few years was done so trickily that salaried middle class was denied any relief ,except the lowest class . Only last year, after eleven years of Arun Jailey’s promise, some relief was given to middle class service class / pensioners . In the mean time bank fixed deposit rates were lowered substantially thus hurting pensioners very hard . The dearness allowance was generally taxed at 20- 30 % thus effectively reducing real purchasing power of salaried class and pensioners .
The government, meanwhile, first started reducing subsidy in higher education and fees in IIT / IIMs / MBBS went up substantially thus increasing pressure on salaried middle class which never had the capital or expertise to start a business venture . Also how much more loan can you take if house EMIs and Education Loan EMIs have to be paid . The high salary jobs dried up thus making education loan payment more difficult . The most cruel was the imposition of GST on medical insurance payment . Genuine Tax payers were denied any extra benefits like low cost high quality education or health services as available in other developed countries . Even in COVID, only the pensioners/ service class were denied the Dearness Allowance . The government apparently gives impression of being dominated by shopkeepers who are just protecting the vote bank of poor by increasing freebies and their earnings by avoiding taxation . They loath service class and pensioners as parasites not realising that since independence it is the scientists . engineers , soldiers , researchers etc have largely been responsible for nation’s peace and progress not the much eulogised ‘ Pakoda sellers ‘ .
In developed countries tax forms 35-40 % of GDP . In India it is only about 16% because apart from low income in villages, bulk of self employed people pay no tax or just enough to cover car , house purchase etc . Chidambaram as finance minister had reduced tax in 1997 but due to his innovative schemes , finally increased the tax collection . Government by reducing middle class to poor class has reduced the aggregate demand thus impeding the economic growth and private investment. Certain amount of savings and trickle down effect is essential for economic growth . Increasing welfare freebies by over taxing the middle class , without actual growth in its income, is just like killing the hen that laid golden egg . Also many freebies are not really required like free travel to women or ration to people above poverty lines . Freebies are a huge expenditure now due to vote bank considerations .
Since fifth pay commission , which increased the retirement age to sixty years, the average life expectancy has gone up by ten years . This has increased the number of pensioners . The average health has considerably increased due to a large expansion of private medical facilities but they are very expensive. People can easily work up to sixty five years of age . The eight pay commission should increase the retirement age to 62 years in first phase immediately and 65 years after six years . This will give the much needed savings and time to government to absorb the shock of extra expenditure .
however it will be a great mistake to fall into ‘ Pakoda sellers ‘ trap by squeezing the already hard pressed salaried / pensioner class . We all know that the real economic growth of the people except the top five to ten percent , has been quite slow . The entry level monthly salaries in private sectors like IT are stagnant at 25 -40 thousand rupees for ten years now with half the purchasing power. The parents now have to spend a lot of money in children education , high housing cost apart from other expenditure . It is the children of this class which by and large are the engines of national growth other than the industrialists , contributing to high foreign remittances and service exports like software etc. Therefore government must come out of the clutches of ‘Pakoda sellers’ in policy making and save the already low buying power of salaried and pensioner class , often termed as parasites by the uneducated ignorants .
Central government recruitment is only about eighty thousand a year . In last twenty years number of children finding job abroad has also increased very substantially across all segments of society . If the government can increase openings in Japan , Europe , Russia etc the impact of increased retirement age on unemployment will be reduced .
Therefore the eighth pay commission must actively consider increasing retirement age to sixty five years in phases and maintain the status quo on one rank one pension in current and future pensioners.
