Cabinet check over PSU retirement age likely

The powers of administrative ministries to determine retirement ages of board-level employees in the public sector undertakings (PSUs) under their control could be curtailed with the heavy industries ministry proposing that all such proposals be vetted by the Cabinet. The idea is to ensure that no ministry arbitrarily increases the retirement age.

For below board-level employees, the heavy industries ministry has suggested continuing with the present format of allowing the ministries to set the retirement age.

The heavy industries ministry has circulated the proposal to other ministries for comments. It is expected to be taken up by the Cabinet soon. Under the present dispensation, the administrative ministry can decide the retirement age of board-level employees.

This often led to favouritism and special appointments or even arm-twisting, officials said. Powerful lobbies are at work to realise their vested interest in raising the retirement age from 58 to 60 years, according to an official.

In cases where the administrative ministry seeks an extension or a special appointment for board-level representatives, it would have to consult the heavy industries ministry, which would forward the proposal to the Cabinet, a senior official said.

Currently, the board of directors are allowed to determine the retirement age for each PSU. The new proposal will lead to a common retirement age for all units in a particular sector. The move is part of a series of initiatives to professionalise the PSU boards.

"Differences in the retirement ages in various PSUs under a single ministry are bound to create problems. The proposal, therefore, aims to keep a common retirement age for all units in a single sector. There is, however, no bar on individual companies going in for voluntary retirement schemes (VRS)," officials said.

Officials in the heavy industries ministry said the government order would be applicable to units that had defaulted on repayment to the government.

These will include profit-making PSUs as well. Profit-making PSUs have to reduce their workforce to remain competitive.

They are allowed to frame their own schemes for VRS and make them attractive enough.

Profitability and financial autonomy were two issues that separated the profit-making PSUs from the loss-making ones. Enforcing a common retirement age for all PSUs across the board would amount to infringing on their autonomy, as every PSU is at a different stage of profitability and productivity.

It is argued that PSUs might have different needs, and therefore, it would be ideal to give them the prerogative to decide the retirement age of their board-level employees, said a senior official.

In the present market scenario, in view of the ongoing restructuring in the industries including Central PSEs, several measures for reforms and restructuring of PSEs have been taken up by the government in the context of rationalization of manpower. Rightsizing of manpower and professionalization of the boards in the CPSEs are some of the measures adopted.