VOLUNTARY RETIREMENT SCHEME(VRS)

 VOLUNTARY RETIREMENT SCHEME(VRS)

Figure 1: VRS

 What is VRS?

In times of economic hardship, businesses take a variety of cost-cutting tactics. One strategy that helps them enhance efficiency and earnings is to reduce their employment through the Voluntary Retirement Scheme (VRS). The system can be implemented by both public and private sector companies. Employees who have been working under constant pressure for years welcome the VRS offer. They can take a break from the boredom of working in the same place and pursue a new career or relocate to a new region. The advantages of the Voluntary Retirement Scheme for the company and the flexibility it provides for employees make it a win-win situation for everyone involved. Between the parties, it's also known as a 'Golden Handshake.' Most working people in most organizations retire at the age of 60. (or 58 years, according to policies of some companies). This milestone does not take into account the individual's capacity to work in the future. They leave their employment commitments behind and pursue their passions. Individuals can opt to retire in their 40s or 50s under the VRS. Companies utilize it as a means of reducing staff strength and controlling expenses. Employees can use it to follow their passions or to devote time to other responsibilities (Scripbox, 2022).


Figure 2: What is VSR?

Features of VRS

Before deciding on VRS, an employee should familiarize oneself with the following features:

  •        Employees must have completed at least 10 years of service or be above the age of 40 to be eligible for VRS.
  •        The employer must settle any provident fund and gratuity payments due when the employee retires under VRS.
  •        Employees are entitled for compensation under the VRS.
  •    To make the retirement process go more smoothly, businesses could provide services such as tax consulting and counseling.
  •    Employees who leave their current employer are unable to return to the same management or organization.
  •     When an employee chooses VRS, the firm is unable to fill the position (HDFC life, 2022).

 Benefits of voluntary retirement scheme

  • A voluntary retirement plan has a number of advantages for both the organization and the individual. Consider the following example:
  • It's a straightforward, practical, and compassionate approach to let go of people and reduce an organization's personnel strength.
  • Because the company's human resource management must persuade trade unions of the importance of implementing voluntary retirement, the procedure is transparent and error-free. Because the system is voluntary, there are no complaints from trade unions.
  • Voluntary retirement might help the organization save money in the long run. When payroll expenditures are reduced, funds may be channeled to a variety of different processes, resulting in increased productivity.
  • The organization provides rehabilitation services, such as training, to its workers in order to help them gain new employable skills. This will assist them in finding a new career in the future.
  • There are no contradictions in the procedure because the rules and regulations of the program have been explicitly stated under the Industrial Disputes Act of 1947, and both the employee and the employer profit from it (ICICI Prudentials, 2022).

Conclusion

The world we live in now is vastly different from what it was in the past. People in their 40s are chasing after retirement, which was often linked with age and poor health. As firms offer voluntary retirement to employees as a way to decrease overall strength, save money, and enhance productivity, more individuals are considering it. The retirement age is often set at 60 years old. When a person reaches this age, they are free to leave their jobs and spend their golden years following their hobbies and interests. Voluntary retirement, on the other hand, occurs when a person is in their 40s or 50s.

References

HDFC life, 2022. HDFC life. [Online]
Available at: https://www.hdfclife.com/insurance-knowledge-centre/retirement-planning/voluntary-retirement-scheme-features-and-benefits
[Accessed 24 April 2022].

ICICI Prudentials, 2022. ICICI Prudentials. [Online]
Available at: https://www.iciciprulife.com/retirement-pension-plans/voluntary-retirement.html
[Accessed 24 April 2022].

Scripbox, 2022. Scripbox. [Online]
Available at: https://scripbox.com/saving-schemes/vrs/
[Accessed 24 April 2022].

 

 

Figure 1: VRS. 1

Figure 2: What is VSR?. 2

 

Comments

  1. Shiron NishanApril 24, 2022 at 6:45 AM

    You have explained very well about VOLUNTARY RETIREMENT SCHEME. and it's very useful to read. Wish you all the best.

    ReplyDelete
  2. KumuduApril 24, 2022 at 5:53 PM

    This is a very important topic that no one has discussed. I have heard about this but got the opportunity to learn about it through this blog. Good topic and good luck👍

    ReplyDelete
  3. FuardMBA24April 24, 2022 at 7:56 PM

    The voluntary retirement scheme is a system used by companies to reduce overstaffing. This can bring some benefits to the employee and the employer.
    all the best

    ReplyDelete
  4. Knowledge Seeker - Anushika KamburugamuwaApril 27, 2022 at 2:37 AM

    This gives insights of a VRS system. Great Article 👍

    ReplyDelete
  5. Uditha ArawpolaApril 27, 2022 at 11:14 AM

    You have discussed the voluntary retirement program very well. As companies offer voluntary retirement to employees as a method to reduce overall strength, save money, and increase productivity, more people are contemplating it. This might benefit both the employee and the employer. Excellent Article!!

    ReplyDelete
  6. Lakshitha MBA 2022 FEBApril 30, 2022 at 8:08 PM

    Voluntary retirement might help the organization save money in the long run. When payroll expenditures are reduced, funds may be channeled to a variety of different processes, resulting in increased productivity.👍

    ReplyDelete
  7. Lakshitha MBA 2022 FEBMay 1, 2022 at 4:50 AM

    For both the company and the individual, a voluntary retirement plan has a variety of benefits.

    ReplyDelete
  8. Prageeth MBAMay 2, 2022 at 4:52 AM

    VRS allows companies to reduce the strength of employees. It can be implemented by both the public and private sectors. Positive Impacts overall Ratio / Financial factors/ efficiency and productivity. Good luck 👍

    ReplyDelete
  9. Jaliya RajaguruMay 2, 2022 at 7:28 AM

    VSR is a technique which used to manage financial crisis within an organisation. But it should be planned by the experts. Sometimes you may need to get the involvement of the external consultants as well. Nice piece of writing. Good luck!

    ReplyDelete
  10. Jude Gnanapragasam May 3, 2022 at 9:07 AM

    Voluntary retirement scheme is a method used by the companies, to reduce the employees voluntarily from the organisation on payment of agreed compensation by the employer. Wish you good luck you have described it well.

    ReplyDelete
  11. Pasan NanayakkaraMay 7, 2022 at 3:15 AM

    This is a very interesting and timely topic. This HR policy can help the employer in reducing aging population who are less motivated and unwilling to work and recruit new talented individuals to the organization. In addition, employees have better control and more options over making decisions regarding his or her career. This was a insightful article and I have a gained a lot of knowledge by reading this article. Well done.

    ReplyDelete

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