A Report on “Financial security for India’s elderly -The imperatives”

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    Senior Express
    May 19, 2017 at 2:15 pm #26298


    In old age financial security is a must for healthcare of elderly. With increase in longevity and nuclearisation of families, it is becoming a more serious concern, especially among those belonging to unorganised sector.

    As per the latest PFRDA- CRISIL report entitled “Financial security for India’s elderly -The imperatives”, every 5th Indian by 2050 will be 60+ as compared to every 12th at present.  The report emphasised that with such demographic transition, development of the underpenetrated pension market in India be initiated now, when the situation is ripe.

    Here are some highlights from the report:

    • By 2050 persons above the age of 60 would increase from 8.9% of the population now to 19.4%. In addition to this, percentage of people above 80 years is likely to increase from 0.9% to 2.8% by 2050.
    • The report suggests that it is crucial to have a well-developed, self- sustaining pension system in this country where the inter-generational support within families is continuously declining.
    • Mr. Hemant G Contractor, Chairman, PFDRA emphasised that “The promotion and development of a pension system is also vital to the growth of the Indian economy as it serves the twin objectives of providing income security to a vast multitude of our ageing population, including in the informal/unorganised sector, and garnering long-term funds for critical, growth-driving sectors of the economy as also the capital market. A developed pension sector not only reduces the fiscal burden on the exchequer, it also has a stabilising effect on the economy by promoting long-term savings combined with long-term investments.”
    • The report emphasises that the government must focus on voluntary pension targeting the huge unorganised sector. The report suggest that to address the issues of low coverage, low contributions and persistency the government can look at providing  (a) flexible payment and withdrawal options, (b) monetary incentives for the lower income strata, (c) exclusive pension schemes for women, and (d) improved financial literacy and intermediation.
    • The report suggests that the current pension structure under Indira Gandhi National Old Age Pension Scheme (IGNOAPS) for elderly below poverty line is sparing and varied across states. Thus, the government can evaluate a targeted pension scheme for the indigent poor.
    • Regarding the organised sector, as per the report, the pension system under this sector is skewed towards debt, compared with global peers, which are strongly invested in equity. So, the report suggests improvement in its asset allocation.
    • The report emphasises that the government should focus on the financial awareness of pension products in the country.
    • While emphasising on financial literary the report suggests inclusion of personal finance and retirement planning in the formal education curriculum.
    • The report suggest that sufficient incentivisation of intermediaries and consistency across pension products in terms of accounting valuation, taxation and disclosures, can contribute in the growth of the industry.

    This report is a much needed and valuable step towards ensuring financial security of senior citizens in both organized and unorganised sector.

    Read full report: https://www.crisilresearch.com/CuttingEdge/Pdf/CRISIL_PFRDA_Pension_Report_April_2017.pdf

    May 21, 2017 at 1:57 pm #26305

    Yes, it’s very important for this group. The poor financial security of SENIORS should be seen as two sides of the same coin. One side not having financial resources and second side given all the resources to the kids. The second is increasing and most dangerous. Better awareness and needbased schemes should be made available for SENIORS. All the best for happy, healthy and secured life for our most valued SENIORS. More reflections will be posted. Looking forward

    Heer Nath
    January 3, 2019 at 7:54 pm #27436

    Thank you

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