1. India Pension Systems Some Issues

2. Historical Framework Schemes are employer based –Government pays DB Pensions 11 million members (Union & State) –Most Private Companies & PSE’s part of EPF 21.5 million members –Some Private Sector have own Provident Fund 4.6 million members in exempt schemes Labour force of 324 million Poorest 50% of population have -ve savings Low life expectancies rapidly extending

4. Fiscal Constraints Direct cost of Civil Servant Schemes Indirect cost of interest cost of funded schemes - 90% invested in government debt Only 11m tax payers - forced investment in GoI debt a form of tax Relics of state involvement in financial sector interest rates sticky downwards

5. Labour Market 20 Year vesting for Government Pensions GoI Pensions represent a significant portion of total compensation Private Employers frequently extend vesting beyond legal minimum No transferability between Provident Funds

6. Challenges High transaction costs of dealing with government schemes & poor record keeping Low cash cost of operating government schemes does not equate to good value Lack of confidence in employer managed schemes & delinquency in employer contributions to government plans. Regulatory vacuum

8. Concluding Comments Changes to Mandatory Schemes will not affect the vast majority of the elderly Micro-insurance at the community level may be more effective to extend coverage India is in some ways ahead of the curve. Funded Defined Contribution Schemes are the trend of the future Financial market repression & poor governance weaken funded schemes