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What is the Retirement Age in Banks in India?
source: futuregenerali
The retirement age in banks in India is important to ensure that you are in the best working conditions as a bank employee. Banking is one of the largest working sectors in the country, and their retirement age can impact productivity, which will impact the economy.
Therefore, here you will learn about the retirement age of employees of various types of banks in India. Moreover, you will know about the benefits receivable in this sector before and after retirement.
What is the Retirement Age in Banking Sector?
Considering your retirement age is important to make a proper retirement plan if you are working in the banking sector. However, various types of banks in India set different ages to retire for their employees, starting from 58 years to 60 years. Some of the common types of banks and the retirement age they provide are as follows:
|
Types of Banks in India |
Employees Retirement Age |
|
Central Bank |
60 years |
|
Co-operative Banks |
58 to 60 years |
|
Commercial Banks |
58 to 60 years |
|
Regional Rural Banks |
58 to 60 years |
|
Local Area Banks |
60 years |
|
Specialised Banks |
58 years |
|
Small Finance Banks |
58 to 60 years |
|
Payment Banks |
60 years |
Retirement Benefits Given to Employees in Banking Sectors
Pre-Retirement Benefits in Banks
1. Job Security
Getting job security is one of the vital reasons why people choose to work in banks. When you start working in a bank, it is impossible to terminate you unless you do something unethical. Therefore, your job is completely secure and with decent pay.2. No Promotion Limits
There are no limits on promotions in banking sectors, and growth opportunities are immense. Even if you join as a clerk or a probationary officer (PO) in a bank, with hard work, dedication, and clearing internal exams, you can even get promoted to the post of General Manager. Moreover, the overall development and experience in banking sectors can later give you higher-paying jobs.3. No Recession Effect
Banking sectors are generally not affected by the recession, as they are the sole backbone of our country’s economy. Therefore, employees working in a bank will not have to worry about their job or salary during the recession.4. Numerous Holidays
Banks offer numerous holidays compared to other jobs, especially in the private sector. Here, you will get an appropriate amount of leaves for every festival celebrated by different cultures in India. This way, you get a chance to celebrate all these festivals. Moreover, these holidays are so properly planned that you can even visit your home if you stay in a different city.5. Incentives
Apart from offering an excellent pay grade, banking sector jobs also give incentives, allowances, concessions, etc., to their employees. You can also get benefits like medical insurance, paid leaves, etc., along with your basic salary. Lastly, you can also receive reimbursements for transportation, newspaper, internet, etc.Post-Retirement Benefits in Banks
1. Pension
As an employee of a government-operated bank, you can receive a pension from an accumulated fund after retirement. You are allowed to receive a guaranteed pension of a minimum ₹9000 per month that can extend up to 50% of the highest pay, summing up to almost ₹1.25 Lakhs per month. However, to receive a full pension as a bank employee, you must attain 58 years of age and complete ten years of service with Government banks.2. Commutation of Pension
The benefit of commutation of pension after retirement is also given to bank employees where you can withdraw a portion of the total available pension. This way, you can avail lump sum payouts during financial emergencies.3. Gratuity
You can receive gratuity after retirement and death up to a maximum of ₹20 Lakhs. It is only available after retirement if you have worked in the banking sector for at least five years. This rule came into force on 1st January 2016.
However, in case of the death of an employee, the entitlement of gratuity takes place in a certain way that is as follows:
| Service Qualification | Rate of Gratuity Payment |
| Less than 1 year | 2 x basic pay |
| 1 year or more (but less than 5 years) | 6 x basic pay |
| 5 years or more (but less than 11 years) | 12 x basic pay |
| 11 years or more (but less than 20 years) | 20 x basic pay |
| 20 years or more | Half of the payments are received after every 6 months of service (should not exceed 33 x emoluments) |
4. Service Gratuity
If you are not serving at least 5 years in your last banking sector, you are entitled to a service gratuity for completing 6 months of each qualifying service. This equals half a month's basic pay (last drawn) and a dearness allowance. In addition, it is a one-time payment which you will get in a lump sum.5. General Provident Fund and Incentives
As per the General Provident Fund Rules, 1960, all temporary and permanent government employees and re-employed pensioners can subscribe to this fund. An immediate payment of the accumulated savings is given to the subscribers after retirement without any submission of legal application. However, non-government bank employees and anyone who got employment in a bank after 1st January 2004 cannot apply for this.6. Dearness Relief
As a bank employee, you are eligible to receive dearness relief or dearness allowance as a percentage of your basic salary to reduce the impact of inflation. You can claim this allowance on a pension, keeping in mind all the conditions applicable before receiving it.7. Leave Encashment
You can claim for leave encashment of earned or half-pay leaves available during retirement. However, this encashment is permissible up to a maximum limit of 300 days. In addition, both employees of Government and private banks are eligible to receive this benefit.Things to Consider While Planning Retirement as a Banking Sector Employee
1. Estimate Post-Retirement Expenses by Preparing a Retirement Budget
It is important to prepare a budget for the daily expenses after retirement. Hence, based on such an idea, it will be easier for you to plan your finances and manage your investments accordingly.2. Check Healthcare Costs and Avail Health Insurance
As you grow old, you will likely encounter more health problems. Therefore, availing a health insurance policy for yourself and your family is essential to provide urgent funds in case of treatment due to critical illnesses or other medical emergencies.3. Pay Off Any Existing Debts Before Retirement
Plan your debt repayments efficiently and avoid recurring debt traps, especially after retirement. Moreover, clearing off debts quickly and not dragging them late will ensure stress-free retirement.4. Settle for a Budget-Friendly Lifestyle
Settle for a simple, budget-friendly lifestyle that provides the required quality and comfort. With this, you will not limit your income to lifestyle post-retirement and can spread it out wisely, among other essentials.
Therefore, the retirement age in banks in India is important as employees' work efficiency depends on this. Moreover, banks being an important sector for controlling money flow and achieving economic growth, determining their employees’ retirement will make them work more efficiently during their most productive years. Besides, bank employees can receive multiple benefits during their working years and after retirement.
FAQs about Retirement Age in Banks
Are both Government and private bank employees exempted from tax on receiving gratuity?
Is it possible to apply for late retirement as a bank employee?
Are there any specific criteria for the extension of the retirement age as a bank employee?
Important Articles about Retirement Age in India
Other Important Articles Related to Retirement & Pension Plans
Disclaimer
- This is an informative article provided on 'as is' basis for awareness purpose only and not intended as a professional advice. The content of the article is derived from various open sources across the Internet. Digit Life Insurance is not promoting or recommending any aspect in the article or its correctness. Please verify the information and your requirement before taking any decisions.
- All the figures reflected in the article are for illustrative purposes. The premium for Coverage that one buys depends on various factors including customer requirements, eligibility, age, demography, insurance provider, product, coverage amount, term and other factors
- Tax Benefits, if applicable depend on the Tax Regime opted by the individual and the applicable tax provision. Please consult your Tax consultant before making any decision.
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