翰威特印度养老金改革-Pension-Reforms-in-India课件.ppt

1、Pension Reforms in India4th Global Conference of ActuariesIndia Life Hewitt15th February 2002Agenda Background&Current Framework Basic Issues Reform Initiatives Reform Initiatives in the private sectorIndia Life HewittBackground Strong Joint family concept With the Patriarch as the pivot provided Ol

2、d Age Security Was adequate in a agrarian&rural society Industrialization and urbanization undermined the traditional concept Even if prevalent effectiveness as an old age security tool is doubtfulIndia Life HewittOld age Security Plans Civil Service Schemes Government at Centre and the state assure

3、d pension to their employees Pension is non-contributory,indexed,Defined Benefit&totally unfunded and paid on PAYG Provident Fund contributed by employees Most of the Quasi Government institutions have adopted the similar schemesIndia Life HewittOld age Security PlansMandated Industry Schemes Provid

4、ent Fund Scheme mandated by a central legislation across the country Provides for contributory Provident Fund Pension towards which a part of the Provident Fund Contributions are diverted Gratuity Scheme again mandated by a central legislation Lumpsum payment based on last drawn wages at the termina

5、tion of employment after a five years of continuous serviceIndia Life HewittOld age Security PlansVoluntary Industry Schemes Superannuation Plans introduced by employers voluntarily Predominantly introduced by Corporates and DB Either administered by the Trustees or by LICOther Old age security sche

6、mes introduced by the Governments Governments at the state as well as at the centre have introduced a few schemesIndia Life HewittCoverageEstimated working population is about 350 million 15%of which is salaried employees(of which Government 23%&Non-Government 49%)53%are self employed 31%are Casual

7、contract workers Only the salaried employees are covered by any kind of pension plans 28%of such salaried employees are also not covered.Effectively this means hardly 10%of the working population is covered.As a percentage of population it is a miniscule 3%India Life HewittBasic Issues India Life He

8、wittIndia Life HewittPension Crises Civil Service Pensions Central Govt Pension liability is 15%of the net tax revenue as on 2000-01 Combined with State pensions the pension liability accounts for 2.25%of the GDP Demographics Expected population increase between 1991 and 2016 is 49%The elderly perso

9、ns(60 and above)would increase by 107%By 2026 elderly persons would constitute 14%of the populationIndia Life HewittOther basic issues Regulatory Framework There are a number of legislations&authorities that govern Pension plans Employee PF is over regulated but under supervised Voluntary Employer P

10、ension schemes are not governed at all Philosophy of regulation Explicit framework or implicit framework Type of Benefit Defined Benefit or Defined contribution Tax regime Currently Voluntary Superannuation plans are EET while PF and gratuity are to a large extent EEE.India Life HewittOther basic is

11、sues Accumulation issues Funding to be made mandatory Currently Civil service pension is totally unfunded Pension part of Employee PF may not be adequately funded Gratuity is most of the time unfunded Asset segregation Voluntary SA and Gratuity Trusts are required to be run as irrevocable trusts EPF

12、O and LIC pool the corporate pension assetsIndia Life HewittOther basic issues Design Issues Vesting No statutory norms On voluntary pension plans it is defined by the employer,sometime excessively harsh against employees Eligibility Portability Indexation Access to corpus India Life HewittOther bas

13、ic issues Payout Issues Method Lump sum Vs Annuity Source Lump sums are paid by Trusts,annuities need to be purchased from Insurance company Insurance&Guarantee Should Pensions be guaranteed on the lines of PBGC?Prudent underwriting and ValuationIndia Life HewittOther basic issues Industry Issues Au

14、thorization criteria Administrators,Fund Managers,Trustees,Actuaries Expense ratios On voluntary schemes employer has to bear all costs No transparency on costs charged by EPFO;Employer needs to bear the same.Prudent norms needs to be evolvedIndia Life HewittOther basic issues Investments Explicit f

15、rame work or Prudent Person Information Disclosure/Audit/Supervision Norms for information disclosure,Accounting conventions,etc.Supervision and regulatory metrics could be made transparent and enforced vigorouslyIndia Life HewittReforms OASIS Committee the first effort Recommended the Chilean model

16、 for covering unorganised sector Utilising the vast network of Public Sector Banks and Post Offices With individual choice on investments and FMs Well intended but is it practical?India Life HewittReforms Budget 2001 Beginning of serious efforts Committee set up to suggest road map on Civil Service

17、Pension IRDA to suggest road map on coverage Both reports are with the Government Budget 2002 to be announcing the next steps.EPFO BPR aimed at reinventing itselfIndia Life HewittReforms Private Sector initiatives influenced by Labour Mobility Change in Concept of Salary Taxability of Salary Interes

18、t rate regime Crystalisation of liability Resulted in shifts from DB pension plans to DCIndia Life HewittReforms-Objectives One single codified comprehensive legislative and infrastructure framework that provides for Coverage of all sections of the population Optimally funded pension plans Provides for employer level/industry level freedom on pension administration Effective individual choice in investments and payout options Unified regulatory authority for the plans and the playersPension Reforms in India4th Global Conference of ActuariesIndia Life Hewitt15th February 2002