Extension post superannuation — Why and how?

It is not uncommon to find senior employees being granted extension after superannuation, especially in public-sector undertakings. The general notion is that PSUs value experience and wisdom more than youthfulness and freshness. However, this is not very common in private-sector organisations where the demand for fresh and dynamic talent is always high.

Well, it does make sense for organisations to value experience and wisdom when it comes to promotions and career development. But what about extension post superannuation? What exactly are the factors that are considered for an extension, be it a private-sector firm or a PSU?

“In all my previous stints, and even at Welspun, I have seen companies valuing wisdom and experience and giving them their share of appreciation”

Rajendra Mehta, group CHRO, Welspun

New-age skills: As Vivek Tripathi, VP-HR, Newgen Technologies rightly points out, the new-age businesses — sunrise and technology sectors — which purely run on new-age skills in technology are bound to value youthfulness over wisdom. Here, extension may not be a common practice because new skills and emerging technologies are sought after. “The technology sector demands new and hard skills, which are more often found in the younger generation,” says Tripathi.

Cost-effectiveness: In private-sector firms, the cost of hiring is also significant. Tripathi explains that in a private company, if a person who has, for instance, worked for five years, decides to leave, the recruiters will probably try to fill that role with a person who may have only half the experience of the departing employee, at lesser a salary. “Private companies would want to hire younger people for cost effectiveness,” shares Tripathi. It makes more business sense to them, than giving extension to a tenured employee nearing superannuation, who costs the company more.

Nature of sector or industry: In IT and technology-driven sectors, giving extension post superannuation is a rarity. Private firms, in general, do not really encourage the practice. However, in traditional sectors, say manufacturing, this is not uncommon. “In all my previous stints, and even at Welspun, I have seen companies valuing wisdom and experience and giving them their share of appreciation,” shares Rajendra Mehta, group CHRO, Welspun. He explains to HRKatha that throughout his career, irrespective of the sector and the role being essayed, he has observed the wisdom of the people being valued. Therefore, quite often, he has witnessed people being given extension after superannuation, based on the firm’s requirement or the employee’s interests and ability.

“The practice of giving extensions does exist, and we follow it here at Vedanta too. However, it is not encouraged because there are other people in the pipeline who are waiting to advance in their career”

Praveen Purohit, deputy CHRO, Vedanta

Career advancement: Employees, irrespective of sector, look forward to advancement in their career. The practice of giving extensions post superannuation can act as a hurdle in the career advancement of those below in the hierarchy, who are awaiting their turn to progress.

As per Praveen Purohit, deputy CHRO, Vedanta, people do get extensions in their careers and are re-hired as special advisors for a period of two to three years. If required, as per the requirement of the company, this extension period may get further extended. “The practice of giving extensions does exist, and we follow it here at Vedanta too. However, it is not encouraged because there are other people in the pipeline who are waiting to advance in their career,” points out Purohit.

Demand for soft skills: In the traditional manufacturing sector, there are some plant-based roles where soft skills are in high demand. This is because the job involves strong people-management skills, maturity and patience, which are acquired over a period of time due to continuous interaction with workers. “In the manufacturing space, there is still some premium attached to the experience of an employee,” Tripathi admits.

Merit vs tenure: Subir Mitra, former executive director & advisor (law), GAIL, feels that things are changing in the public-sector undertakings as well. Employees are divided into classes. Those in the lower class, who are more often unskilled workers, get promotions on the basis of tenure or seniority. In the higher classes, that is, as we go up the hierarchy, employees are evaluated on their performance and skills. And therefore, promotions are merit based. “Now, all PSUs have started to realise that they are commercial entities, and this change is being seen in the mindset of the management,” observes Mitra.

“In the manufacturing space, there is still some premium attached to the experience of an employee”

Vivek Tripathi, VP-HR, Newgen Technologies

Mitra further adds, “In PSUs, career development is very systematic. The employees need to attain some amount of maturity before they can be considered for bigger roles.”

Approvals: Giving extensions to those who have superannuated involves several approvals. When it comes to public-sector undertakings, the red tape can be quite frustrating. Permissions have to be sought from higher authorities and a strong case needs to be presented as to why a person is being granted an extension. “In my case also, till now I am the only one who has been granted an extension on special request,” shares Mitra.

Mitra also observes that the period of extension has reduced these days. A person who has superannuated will get an extension for only about six months, or for a maximum of up to a year.

Subir Mitra, former executive director & advisor (law), GAIL

The increase in the use of technology in companies has increased the value of all the young talent in the market. Digitalisation, further accelerated by the pandemic, has made private-sector firms realise the importance of the younger lot that understands new-age technology and its use far better than the older lot. Not surprisingly, the private-sector firms are constantly endeavouring to attract and retain the best of fresh young talent available. Not just that, companies who require skills in technology, artificial intelligence (AI) and machine learning (ML) more often find it in the millennials.

However, there are still areas where a senior employee’s maturity, patience, calm composure in the face of adversity and negotiation skills — all of which come from years of experience — are taken into account while considering an extension after superannuation.