‘Everybody needs pension, especially the unorganised’ | Business Line

‘Everybody needs pension, especially the unorganised’ | Business Line


June 12, 2015
Pension for all
refers to the report ‘NPS corpus grew by Rs25,000 cr in 2014-15, says PFRDA
Chief’ and LIC Pension Fund CEO’s interview captioned ‘Everybody needs pension,
especially the unorganised’ (June 12). Ideally, social security efforts should
have ‘Pension for all’ as a long term objective. The decade old NPS which has
recently earned legislative legitimacy, is yet to make any serious plans or
projects for such an inclusive pension scheme. Instead, PFRDA has been
consistently dismantling existing pension schemes, encroaching into fairly well
managed funds like that maintained by EPFO and now there is a move to drag LIC
to implement a scheme (yes, Atal Pension Yojana) which may net in millions, but
unlikely to be beneficial to the subscribers in the long run.
test for Atal Pension Yojana which is being marketed with Bachan advertisements
would be the present worth of the promised pension amount of Rs 5000 for those
joining at ages 25, 35 and 45 discounted at the present rate of inflation.
growth of NPS Corpus by Rs 25,000 cr should be seen in the background of the
captive clientele created by discontinuing regular defined benefit pension
schemes in the organised sector. Ten years down the line, NPS is yet in search
of substantial contribution from ‘open market’.
Facing the future
The 2003 New
Pension Scheme was imposed on the ‘future’ employees of the government and
other organisations which had well-designed Defined Benefit Pension Schemes and
later offered to the public with paltry government subsidy for external
considerations and pressure from certain vested interests. Long after, in
2006-07, though for totally different reasons, ING Group and Indian Institute
of Management, Bangalore undertook a joint research on pension systems in India
at the instance of ING Global Retirement Services. The findings are available
in the form of a 588 page book “Facing the Future: Indian Pension Systems”(By
David J. W. Hatton, Naren N. Joshi, Fang Li, R. Vaidyanathan, S. Jyothilakshmi,
Shubhabrata Das and Sankarshan Basu. Publisher: Tata McGraw Hill Rs625). One
wishes, Government of India and PFRDA revisits the analysis contained in this
book which has gone into the evolution of new pension systems in several
countries in the world and the relevance of those experiences in the Indian
Facing the Future
claims to “analyse the results of extensive market surveys, draws from the
experience of industry experts and studies the different pension systems around
the world. The book encourages thinking on the pension issues which will lead
to a viable solution to India’s problems.”
Twelve years after
the introduction of NPS, these observations may look a little unconvicing or
odd. But the lingering feeling that a well-established social security system
is being discontinued without any reasonable substitution makes one flag the
incompetence of the NPS in its present form. It is pathetic that there is no
evidence to show that Government of India or PFRDA has taken note of the
findings recorded in the book under reference for which PFRDA’s then Chairman
Dhirendra Swarup had written a Foreword in 2007!
M G Warrier,


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