Rethinking retirement age: A win-win solution for Sri Lanka’s ageing workforce

A more equitable approach would be to consider extending the retirement age through a consistent national framework rather than limiting the opportunity to selected sectors or occupational groups. Such an approach could create a win-win outcome without weakening productivity or discouraging younger employees 

Retirement should not mean that a capable employee’s knowledge, experience and economic contribution must suddenly end on a predetermined birthday. Extending working lives can provide employees with greater financial security, help organisations retain valuable expertise and support the transfer of knowledge to younger workers. At the same time, any extension should be carefully managed so that it does not reduce productivity, delay younger employees’ career advancement or place an unsustainable burden on public finances.

Debate in Sri Lanka

Sri Lanka is again debating whether public employees should remain at work beyond the present retirement age. The discussion has moved beyond the judiciary and health service, with several professional groups requesting longer service because experienced personnel have left the country, and some public institutions face serious staff shortages. However, the Government has not yet announced a blanket extension for all public servants. Cabinet spokesperson Dr. Nalinda Jayatissa has said proposals have been received from several professions, noting that the retirement age of specialist doctors, medical officers and dental surgeons was previously extended from 60 to 63.

At present, the compulsory retirement age for most Sri Lankan public officers is 60. Public Administration Circular 19/2022 made this rule effective from 1 January 2023, while retaining provisions to obtain the services of particular specialists when necessary. The rule excludes officers, such as members of the judicial service, whose retirement ages are specifically determined by the Constitution or other legislation. The 2022 Interim Budget similarly established 60 as the retirement age for employees in the broader public and semi-government sectors.

In the private sector, the Minimum Retirement Age of Workers Act No. 28 of 2021 generally prevents employers from compulsorily retiring covered employees before they reach 60, subject to transitional arrangements for workers who were already older when the legislation commenced. Importantly, this is a statutory minimum retirement age rather than a universal maximum. An employer and employee may therefore agree to continue the employment relationship beyond 60. 

The social argument for reviewing retirement policy is strong. World Bank data place Sri Lanka’s life expectancy at birth at approximately 77.7 years in 2024. More importantly, the 2024 Census shows that people aged 65 and above now represent 12.6% of the population, compared with 7.9% in 2012. Meanwhile, the proportion of children under 15 declined from 25.2% to 20.7%. Sri Lanka is therefore ageing while its future supply of younger workers is becoming relatively smaller. 

Consider a 58-year-old public employee who is still repaying a housing loan, financing a child’s university education and supporting an elderly parent who requires regular medical treatment. Retirement may be approaching, but the employee’s family responsibilities have not ended. For many households, the period between 55 and 65 is one of the most financially demanding stages of life. An opportunity to work longer could protect household income, reduce financial anxiety and enable older employees to remain professionally and socially active.

Social fairness 

Nevertheless, social fairness cannot be separated from fiscal reality. Sri Lanka’s Budget, Economic and Fiscal Position Report 2026 states that salaries and wages of public servants cost Rs. 760.7 billion during the first eight months of 2025—an increase of 15.3% following the public-sector salary revision. Retaining senior employees may involve paying considerably higher salaries than those received by newly recruited entry-level staff. It could also delay promotions, frustrate younger officers and restrict employment opportunities for graduates. These concerns contributed to the decision to restore the retirement age to 60 in 2022. 

However, the cost equation is not one-sided. When an experienced engineer, specialist doctor, lecturer or senior administrator retires, the institution may face pension expenses, recruitment costs, training requirements and an immediate loss of productivity. A new recruit may need several years to develop the same institutional knowledge, professional judgement and stakeholder relationships. Where genuine staff shortages exist, retaining a proven employee for another two or three years may be less costly and less disruptive than leaving a critical position vacant or hurriedly appointing an inexperienced replacement.

International practices 

International practices show that retirement systems can be flexible, although the systems are not directly comparable. Australia’s Age Pension eligibility age is 67, while individuals can retire earlier using their superannuation. The United Kingdom’s State Pension age is currently 66 and is gradually rising to 67 between 2026 and 2028. The UK has also abolished its former default retirement age, meaning employees are not generally forced to stop working at 65. 

In the United States, the full Social Security retirement age is 67 for people born in 1960 or later, although benefits may be claimed earlier at a reduced rate. Singapore provides a particularly relevant model. From July 2026, its minimum retirement age is 64, while eligible employees must be offered re-employment until 69. This enables organisations to retain experienced people while reviewing their roles and employment arrangements. 

Extending the retirement age alone will not solve Sri Lanka’s workforce challenges. But extending it fairly, transparently and productively could transform retirement reform into a national opportunity. The final objective must be clear: no employee should remain merely because of age, and no capable employee should be forced to leave merely because of age. A successful policy must ensure that every additional year of employment delivers value to the worker, the organisation, the younger generation and the country

Equitable approach 

A more equitable approach would be to consider extending the retirement age through a consistent national framework rather than limiting the opportunity to selected sectors or occupational groups. The social and financial pressures associated with retirement are experienced by employees across the workforce. Any extension should therefore be based on fair and transparent criteria, while also considering medical fitness, performance, organisational requirements and succession planning.

Such an approach could create a win-win outcome without weakening productivity or discouraging younger employees. Experienced workers could continue contributing their knowledge and skills, while organisations introduce mentoring, knowledge-transfer and gradual succession arrangements to support younger employees’ career development. A carefully managed extension would therefore recognise the needs of older workers, maintain organisational performance and ensure that opportunities for workforce renewal are not unnecessarily restricted.

Sri Lanka should not frame this debate as a choice between older workers and younger workers. The country needs the experience of one generation and the energy, technological capability and new thinking of the next. The strongest retirement policy will be one that brings these generations together rather than placing them in competition.

Extending the retirement age alone will not solve Sri Lanka’s workforce challenges. But extending it fairly, transparently and productively could transform retirement reform into a national opportunity. The final objective must be clear: no employee should remain merely because of age, and no capable employee should be forced to leave merely because of age. A successful policy must ensure that every additional year of employment delivers value to the worker, the organisation, the younger generation and the country.

(The author is an HR practitioner, academic and researcher currently working at the University of Canberra, Australia. He specialises in human resource management, psychosocial safety climate, employee wellbeing and workplace performance. He holds a PhD in Management from the University of Wollongong, has published research in international journals and has presented at several international conferences)