We are the lowest cost pension providers in the world today, says PFRDA Chairman - The Hindu

We are the lowest cost pension providers in the world today, says PFRDA Chairman - The Hindu

Please read this in the context of Chapter V-1 National Pension System in my book "Banking, Reforms & Corruption: Development Issues in 21st Century India"(Available at Amazon.in and Flipkart)

I will be backwith more comments soon

M G Warrier Online comments posted on January 26, 2015: PFRDA came into being long after NPS was introduced and at this point of time, the authority has no elbow-room to reverse history. NPS(introduced as New Pension Scheme through a notification ten years earlier) was brought into being, by a government which was evading reality and was shy of speaking out truth. There were’external’ pressures to fund the defined payment pension scheme, the liability under which was(and even now is) being met on a “Pay As You Go” basis. According to a conservative estimate in 2006, the unfunded liability under the scheme was Rs 3.65 lakh crore(It is incidental that the unfunded liability of pension funds in US was around $4 trillion, about one-fourth of that country’s debt!) GOI gave an impression that the old pension scheme has been replaced by NPS. As defence employees were not covered by NPS and the outgo under the old pension scheme would continue for the next 30 years, GOI was saved only because of the illiteracy of the opposition and helplessness of those affected as the NPS was prospective in effect. PFRDA has no choices to make. It has to regularise what has been done without much statutory or legal backing. After 10 years, per account balance in NPS accounts is less than one lakh rupees. Many states have not started implementing NPS. In some states employees have been denied the EPF membership and government has not started contributing to NPS. The per account balance in Swavalamban accounts is about Rs4,200 after four years including the per account contribution of Rs1,000 per annum by government. Future of such a scheme need not be discussed. Till things like taxation issues are sorted out, why not encourage public to continue with PPF? If this is the implementation of the scheme is tardy and leaves much to be desired even after 10 years of implementation of NPS, where is the guarantee that things will improve now? M G Warrier, Thiruvananthapuram


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