Mumbai, November 25
Dramatically ageing populations, declining birth rates and a lack of robust retirement systems will see many countries struggle under the burden of providing adequate pensions to their senior citizens without drastic action.
The Indian index value has improved from 40.3 in 2015 to 43.4 in 2016 primarily due to an increase in the net replacement rate.
Now in its eighth year, the Melbourne Mercer Global Pension Index (MMGPI) highlights significant improvement made by India meriting popularity of tax incentives under National Pension scheme, introduction of Universal Account Number (UAN) for Provident Fund by EPFO and increasing the pension age from 58 years to 60 years Under statutory pension plan EPS 95 which offers regular stream of income on retirement.
Anil Lobo, India Business Leader – Retirement, Mercer adds, “New initiatives by Government of India in providing tax incentives under National Pension system both during accumulation stage and withdrawal at retirement are increasing its popularity among employees in corporate sector. Further Atal Pension Yojana (APY) which was launched by Government of India in the year 2015 has also contributed to increase in coverage for pension among workers in the unorganised sector. As APY is a guaranteed pension scheme of Govt. of India, it paves the way for securing old age income by facilitating regular savings of small amounts during the earning phase of life.”
Mercer believes continued and persistent efforts in increasing financial literacy through various programmes driven by Government of India, Pension Fund Regulator and also involving various financial institutions including banks have helped increase subscribers under both these schemes. However, there is work to be done to achieve the coveted ‘A Grade’, only ever held by Denmark and Netherlands.
“Additionally, UAN has eased transfer and traceability of transfer of Provident Fund under statutory Pension plan. Moreover implementation of UAN ensures avoiding unnecessary leakage from the pension fund and allows withdrawal of pension accumulation under statutory plan only on certain specified compelling grounds. Also, the Government has increased the pension age from 58 years to 60 years Under statutory pension plan EPS 95 which offers regular stream of income on retirement (Administered through EPFO (Employees’ Provident Fund Organization)). This move has been largely welcomed by the members as most of them continue to remain employed till the age of 60 years,”