“Today we have 110 million people over the age of 60. By 2030 this number will be 200 million and by 2050 it will be over 300 million. Unless we start doing something now, this will prove to be a huge burden on the society and the nation. Luckily, GOI is very keen to cover every Indian under some or the other pension scheme,” said Mr. Hemant G Contractor, Chairman, Pension Fund Regulatory & Development Authority at the final valedictory session on ‘Pensions and Retirement Solutions’ under Confederation of Indian Industry’s (CII) flagship event the 17th Insurance Summit.
Explaining, Mr. Contractor said, “In his budget speech, the Finance Minister said, that the government wants to convert India from a “pension-less” society to a “well-pensioned” society. The Atal Pension Yojana shows the seriousness of the government on the same. With over 85% people in the informal sector who have no insurance coverage, this is cause for serious concern and worry for all and the Government’s seriousness on the issue is very welcome.”
“The other cause of concern is social factors. Joint families have broken up and a lot of old people are left to fend for themselves in their old age. Add to that inflation and there being no income to support them. Going forward the problem is only going to multiply unless we do something now. The National Pension Scheme (NPS), was born from the intention to bridge this gap. The idea was to build a robust pension system that is voluntary in nature, which every citizen can turn to and join. Sadly the pace of its growth has not been too encouraging. Despite such acute need, people have not come out in large numbers to participate in it,” said Mr. Contractor.
He went on to explain, “NPS is arguably the lowest cost pension schemes in the world. Its architecture is low cost and flexible and there is no fixed amount that one needs to pay, there are a lot of choices while joining and they can choose and switch between pension and investment patterns. Some issues were the cumbersome paperwork. We have reduced it considerably and simplified the system. There are attempts to create more flexibility and increase awareness of this product.”
He put his finger on the pulse of the problem when he said, “Pensions are very important for this nation. Yet it is hard to convince young people to join pension schemes as they are considered a taboo. Most people start thinking of pensions only after the age of 45. But it is too late. Thankfully pension is getting a lot of attention now and the lack of awareness on pension would be a thing of the past.”
August 21, 2015