In April 2025, the central government increased the age of retirement of certain employees to 62 years and the change took effect immediately. This is to be applicable to central government doctors, PSU employees and some academic staff in order to hold on to expertise.
Purpose of the Hike
The change will overcome shortages in essential areas such as healthcare and public enterprises. Employees have higher life expectancy and so spend more years being productive but the pension plans are affected and so is the career interruption.
Impact on Workforce
The employees will work two years longer than before and the added years to work will increase the life time earnings. With 50,000 per month remuneration, this brings on an extra 12 lakhs in two years. But it postpones full access to pension, and that necessitates modified financial plans.
Pension and Gratuity Effects
Extended service enhances gratuity which is determined as (Basic + DA) 15 Years of Service26. Pensions, which begin at age 62, are set at 50 percent of the most currently paid wage, and this impacts the patterns of retirement incomes.
Affected Employee Groups
The salary hike includes central government doctors, PSU employees and a number of academic careers under UGC. Other states, such as Uttar Pradesh are considering changes to this, however.
Financial Planning Needs
Employees will have to prolong the savings plans as pensions will commence later. The gap can be filled by investing in PPF, NPS or fixed deposits as they can achieve financial security in the longer working years.
Retirement Benefit Examples
| Basic Salary (₹) | Years of Service | Gratuity at Age 60 (₹) | Gratuity at Age 62 (₹) |
|---|---|---|---|
| 50,000 | 30 | 8,65,384 | 9,23,076 |
| 50,000 | 35 | 10,09,615 | 10,76,923 |
| 1,00,000 | 30 | 17,30,769 | 18,46,153 |
| 1,00,000 | 35 | 20,19,231 | 21,53,846 |
Navigating the Change
The 2025 increasement in the retirement age has financial prospects yet it should be planned. Employees are supposed to reevaluate the savings, track the changes made by employer and invest to build a future. Check www.dopt.gov.in to check on the official compliance and guidelines to be followed.
Also read: EPS-95 Pension Raised to ₹7,500 from August 2025: Relief for 78 Lakh Retirees