A voluntary retirement scheme (VRS) is an option provided by many companies to its employees, thereby allowing them to take retirement before their actual retirement age. VRS is, therefore, also called as early retirement.
VRS is beneficial for both the employer and the employees. The employer can reduce staff while the employee gets the retirement benefits. This option is, however, available to only those aged 40 years and above. Often, employees who want to pursue their dreams or change their profession choose this option so that they can explore something new while getting retirement benefits and reduced workload,thus helping them focus on their new after retirement life.
Eligibility:Any employee who has worked for over 10 years in a corporation and is aged above 40 years can avail of this option and seek early and/or voluntary retirement. The worker defines any employee or executive related or employed by the company.
Also Read: 6 Factors To Keep In Mind For Early Retirement
Benefits To Employee And Employer: Retirement is an ageing process, and some people might want to take an early exit for health of other reason. For such employees, VRS provides retirement benefits while also allowing them enough time to spend with the family without having to worry about funds, or take up a relatively easy job that might not be as stressful as their previous one.
Corporations, who often encourage fresh talent, also give VRS option to its ageing and experienced workforce as a way hire new talent without having to resort to employee retrenchment on a large scale, which could potentially lead to litigation and labour issues, and also invite bad publicity.
Retirement Compensation: The compensation for the retired employees is calculated on the basis of their last drawn salary, which is equivalent to employee’s three months’ salary for each completed year of service. Another way to calculate the compensation to multiply the last drawn salary to the remaining months of the service left before the original date of retirement. The retiree also get many other service benefits, such as counselling on tax, and rehabilitationand relocation facilities if they opt for it.
VRS is particularly helpful for those people with health related issues, or other mobility issues that seem to worsen with age, or for those, who have no particular liability to address and want to take an early retirement to spend time with family, having missed out on those during their working years.