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Journalism of Courage
India8217;s pension reforms took an important step forward, with a shift in the stance of the Left parties 8212; away from ideological hostility towards the idea of pension reforms, to a discussion about the details of the Pensions Fund Regulatory and Development Authority PFRDA Bill. The traditional 8220;defined benefit8221; pension has run into trouble worldwide. Governments and companies have backed away from extravagant promises, thus showing that the benefit was not so 8220;defined8221; after all. This has been replaced by a more meaningful focus on building up pension wealth through a life time of saving. This is in the best interest of workers, particularly because it allows them to switch jobs when better opportunities arise.
Early efforts at pension reforms internationally8212;some 20 years ago8212;ran into trouble with high fees and expenses being paid to finance companies. The Indian New Pension System NPS design attempts to control these costs, and bring greater competition to bear on the processes of handling pensions so as to bring down the prices paid by participants. The issues of design, awareness and education, fee and expenses and reach need to be discussed extensively in the PFRDA Bill so that NPS is made accessible to all Indians 8212; farmers, unorganised sector workers, self-employed 8212; and not just civil servants and the organised sector as the current pension system is. India is the last major country to experience the demographic transition. The country immediately in front of us in the queue 8212; China 8212; has encountered huge problems on this front because of a combination of defined benefit pensions and the one-child policy which engendered a prematurely aging population. China is now trying to move towards defined contributions and private pension fund managers but these moves may just be too late, given an aging society.
