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Journalism of Courage
Pension reform, and the sophisticated institutional structure based on the Pension Fund Regulatory and Developmental Agency PFRDA, is under attack from the CPM. An eight-year process has gone into policy analysis, institutional design and consensus building, leading to adoption of the New Pension System NPS for new recruits at the Centre and eight states: Orissa, Jharkhand, Gujarat, AP, HP, Rajasthan, Tamil Nadu, Chhattisgarh, Manipur. If the recent ordinance is not tabled in Parliament by Thursday, this will be a major failure of reforms, and a crisis for the handling of roughly 2,50,000 government employees who have been put into the new system. Will pensions become one more area where the fractious UPA fails to deliver?
All countries go through a 8220;demographic transition8221;, starting out with many children, and ending up with an aged society. This induces huge stress since arrangements need to be made for income support for the elderly. India is at a unique point in history where the next 10 years will see an upsurge of young people going into the labour force. This is a one-time opportunity to put a sound pension system in place, where young people would be building pension wealth so as to stand on their own feet in old age, with the dignity of not requiring a government dole. The two mechanisms in India today to deal with old age income security, civil servants pension and EPFO , are dysfunctional. They cover less than 10 per cent of the population. In addition, both actually leave workers insecure in old age, as they depend on promises of a fiscally unsound government. Pension payments get so gigantic that the government8217;s word is not to be trusted. In nation after nation, including in the best-run European countries, government-driven pension systems have reneged on promises made to the elderly.
