Abstract
Pension policy in India has been characterized by the dominance of the organized sector based on financing through employer and employee participation. As a result the coverage has been limited to the organized sector and the employees in the unorganized sector needs to be brought into purview of the formal channels of old age financial support. Further, the existing mandatory and voluntary private pension system needs uniform regulatory framework for transparency and improved service. There is an imperative need to manage the pension funds through fund managers as is the practice in some of the developed countries to derive the positive spin-offs in terms of investment options and making available the resources for improving growth. In view of the experience with the current pension system in India, efforts have been made by the Government in the recent years towards the direction of reforms in pension policy with the introduction of a new pension system in 2004. The present paper focuses on the recent initiatives and reforms in the pension system in India in the light of international experience as also the compulsions due to demographic factors and attendant implications for finances of the Government both Central and State Governments. The policy initiatives include setting up of the Interim Pension Fund Regulatory and Development Authority (October 2003), introduction of a New Pension System and introduction of the Pension Fund Regulatory and Development Authority (PFRDA) Bill in Parliament in March 2005. Against this backdrop the paper also highlights some of the policy challenges and imperatives to be addressed in the medium term.
Published Version
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