'Increase in economic status of women pose special problem'

Bangalore, July 21 (UNI) The increase in sex ratio of the workforce and economic status of women pose special problems in the design of pension systems, Pension Fund Regulatory Development Authority Chairman D Swarup opined today.

''Designing an effective, efficient and accessible system, which caters to the requirement of a heterogeneous work force, nearly 88 per cent of which is not covered by any pension or old age security scheme, is the immediate priority of those concerned with pension reforms process in India. The challenges of translating the design into reality will arise thereafter and will take a while to be overcome,'' he said.

Delivering the inaugural address at a conference on 'India Pensions: Challenges Ahead', organised by the Indian Institute of Management-Bangalore (IIMB) here, he said the level of financial literacy and pre-ponderance of rural aged make it a daunting task.

Mr Swarup said there was a need to create more awareness about the new pension scheme, under which employees had to contribute a percentage of their salary. ''But the new scheme will be applicable only to the new entrants. The problem of financing the pension liability of those already under unfunded or partially funded scheme is likely to cause fiscal stress for the next two or three decades.

Some parametric changes will, therefore, become necessary for effective and efficient discharge of this liability.'' He said that according to a study, the pension debt liability of the Union and State Governments arising would be Rs 20,034 billion or 64.51 per cent of the GDP. ''While the methodology can be questioned, the magnitude of the problem that this estimate suggests cannot be ignored. The enormity of the problems becomes even more apparent when this liability is compared with the explicit internal public debt of the Union Government which is 84.86 per cent of GDP (2004-05).'' Mr Swarup said a survey conducted by the Asian Development Bank suggested that India was in transition stage from old age support systems based on the family to a new reality where for the generation of workers aged 40, the balance between family support and self support in retirement was likely to fall heavily in the latter direction.

''It is therefore essential that policy makers correctly anticipate the course of the transition so that adequate counter measures are in place at the appropriate time. Recognising the fact that pension reforms are an urgent social priority, policy makers in India are working hard to evolve pension systems which are not only capable of meeting the present challenges, but also able to adapt and restructure over time to meet unforseen developments in future,'' he added.

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