Longer life and stagnated retirement age: Sri Lankan perspectives

Abstract

Demographic ageing, resulting from rapidly increasing life expectancy and decreasing birth rate, raises a number of challenges. Many countries in the world are raising the age of retirement eligibility because of the significant rise in life expectancy. Although Sri Lankan demographic environment also demonstrates an increase of life expectancy and ageing, the Government has not made comparable increases in the age of retirement. In this backdrop, this paper using both primary and secondary data, examines the timely debate of increasing the mandatory retirement age of the country. The government officials in Sri Lanka can work up to the age of 60 years without seeking extension and at the age of 60 years retirement is compulsory. Recently the government has proposed to extend the mandatory retirement age of them 63 years. At the same time age relating to contributory schemes such as, farmers’ pension and social security pension, have also been extended from 60 to 63 years. The number of government pensioners is increasing significantly, putting more pressure on the recurrent expenditure of the government. Empirical data reveal that the Sri Lankans seems healthier in terms of life expectancy, healthy life expectancy and HDI. Compared to other south Asian countries with similar heath status Sri Lanka enjoys a long retirement period providing the fact that Sri Lankans are capable of working more productive years after retirement age. In fact, as of 2012, male and female retiree at age 60 could survive for another 17 and 21 years respectively. Also increasing the mandatory retirement age will be a partial solution to the anticipated labour shortages in near future arising due to rapid ageing process. However, the rise in longevity is exerting pressure on public finances with increases in pension and elderly care expenses. Hence, it seems timely to consider increasing the mandatory retirement age of the government officials, after assessing the merits and demerits of such measure.