Assets under management of the New Pension Scheme (NPS) are likely to move up from Rs 14,000 crore to Rs 20,000 crores by the year-end, the Pension Fund Regulatory and Development Authority (PFRDA) said today.
The scheme is a crucial component of reforms in the Indian pension fund market whose valuation is estimated at Rs 13.72 lakh crores, said Mr N.R. Rayalu, managing trustee and chief executive officer of the NPS Trust, while addressing 7th ASSOCHAM National Conference on Pension and Retirement Planning. He said that pension funds can contribute immensely for development of infrastructure as the country plans to spend Rs 50 lakh crore during the 12th Five Year Plan (2012-17). “Infrastructure projects are starved of long-term funds. Pension funds can be the biggest contributor for development of social and physical infrastructure.”
Rayalu called for spreading financial education to cover unorganised sector under the social security net after retirement. Only 13 per cent of the workforce – mainly employees of the government and organised private sector – are covered by a pension cover.
Meanwhile, Tim Jenkins, Asia Pacific retirement risk and finance business leader at Mercer global consulting firm, said old age poverty problem looms on the horizon worldwide. Many western governments have amassed large levels of debt that must ultimately be repaid.
Further, faced with increased competition and concerns about financial risk, many employers have consistently been scaling back their support of retirement programs. “With greater degree of uncertainty and volatile capital markets, strategic options backed by a robust framework and policy driven retirement systems are recommended.”
K.C. Mehra, chairman of ASSOCHAM Knowledge Millennium Council, said recent data indicates the average life expectancy in India of a 65-year-old has increased to 79, suggesting a target retirement age of 64. The country’s working population aged between 15 and 59 years is expected to reach 76 crore by this year-end.
ASSOCHAM secretary general D.S. Rawat said in his message that the government has permitted setting up of infrastructure debt funds by private players to source long-term debt from foreign and domestic investors. The government is also committed to bring foreign direct investments in the pension fund sector by way of equity which will support to leverage the volume of assets in the country. “Large-scale reforms are thus required to ease the pressure on government treasury to provide for a social security net for growing number of senior citizens as well as growing workforce – especially in the unorganised sector,” he said. (NSS)