The PFRDA bill is likely to be tabled in the Indian parliament, and if sources are to be believed this bill will be passed with a compromise - the FDI will be limited to 26% for both insurance and pensions. The issue now is not whether we have an appropriate mechanism to deliver social security needs, the issue really is who will deliver, and how will they deliver?
As to who? I guess it would have been more prudent to allow life insurance companies to sell pension products - minimising cost of distribution, and maximising the benefit of increasing longevity and thus improving mortality.
The NPS suffered largely due to lack of appropriate distribution. There's also concern about the extent to which pension funds would be allowed to invest in equity markets as establishments are struggling to provide a stable stock market. Even before any significant investments are allowed in equity markets, the Government should take serious and series of steps to ensure that the equity markets are stabilised, and also ensure that quality long term debt instruments are available. Passing the bill is only one part of the puzzle and could well be misplaced if each piece is not put well together.
May be all this is slated for 2015?
Category: Funding longer lives: Pension/retirement