Create Self-generating Pension Funds
24 August 2001
An expert in the field of social security, Mr Mukul G. Asher is deeply concerned about the welfare of the ageing people whose number is growing fast in India. With a view to providing better healthcare and support system, Mr Asher advocates creating self-financing pension funds as is being done by several developed and developing countries all over the world. In an exclusive interview to domain-b, Mr Asher explained to Alok Agrawal how pension funds can meet this challenge without burdening public finance.
domain-b: Why do we need pension reforms?
MA: The basic idea is that people are living longer and they have healthcare needs to take care of. Any developed society will want its senior citizens to live in dignity and with a fair amount of financial security. The present social security arrangements in India are composed of different elements. These are not well integrated and will not succeed in their major objective of providing substantial retirement-income potential to a large proportion of population without impairing Indias international competitive standing.
The schemes should be structured in a manner that makes them self-financing and the burden on the state is minimum. Pension reforms are needed to address issues of social adequacy, coverage and equity and are a part of larger set of reforms. They assist in fiscal consolidation as well as fiscal flexibility and have the potential to generate positive impact on important economic issues such as savings, financial markets, capital markets and rate of growth.
domain-b: What are the trends, internationally?