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Abstract
Countries with demographic shifts in population across the world are revisiting their pension systems. India, a county with large informal workforce understood a decade back that the generous tax financed Defined Pension System which serves only a miniscule of the population that too, majorly of the Organised Sector may not work and sustain. Paradigm shift in the Pension landscape of the country, post launch of the 'National Pension System (NPS)' on 1st Jan 2004 and the passage of the Pension Fund Regulatory and Development Authority (PFRDA) Act, 2013-14 to regulate the Pension sector are hailed as major reform initiatives in Pension sector. This paper examines and explains the National Pension System (NPS) thread-bare since inception and the reform initiatives in general. Comparison of the NPS with other Pension savings schemes of the traditional variety and evaluation of the growth and current status of NPS is achieved by researching into NPS / PFRDA records spanning more than 10 years and practices that evolved in the Pension sector. The evaluation of the Pension Sector Reform in the context of the overall Financial Sector Reform initiatives of the government is of topical relevance and has connotations to Public Finance and Policy initiatives in the coming Years.
Key Words : Pension Reforms, New Pension System, NPS, Defined Pension, Defined Contribution, PFRDA Act, PRAN, Tier I Account, Tier II Account, POP- SP, CRA, Comparison with NPS
1.1. Introduction:
Pension plans provide financial security and stability during old age when people don't have a regular source of income. Retirement plan ensures that people live with pride and without compromising on their standard of living during advancing years. Pension scheme gives an opportunity to invest and accumulate savings during the active years and get lump sum amount as regular income through annuity plan on retirement. According to United Nations Population Division World's life expectancy is expected to reach 75 years by 2050 from present level of 65 years. The better health and sanitation conditions in India have increased the life span. As a result number of post-retirement years has increased. Thus, rising cost of living, inflation and life expectancy make retirement planning essential part of today's life. Many Governments are finding it difficult to operate defined pension schemes world...