Pension reforms, Financial Management

Pension Reforms

On January 1, 2004, Pension Funds have come into force in India. Government servants will have to subscribe to them. The new pension fund system is primarily drawn from the OASIS report. It proposes a phase-out of the Provident Fund scheme in order to eliminate competition for the new fund to help it grow its corpus. Slowly, the new pension scheme will completely replace all the retirement fund schemes presently available. The new system will be initiated by setting up a Pension Fund Regulatory and Development Authority (PFRDA). The immediate job at the authority's hand would be to issue licenses to Pension Fund Managers (PFMs.)

Under the new system, there would be no assured returns to the pensioners. New government employees are expected to part with 10% of their salary and Dearness Allowance (DA) to one of the PFMs. The government too will make a matching contribution. Pensioners can choose from among three pension schemes - safe, balanced and growth.

PFMs, however, would have the freedom to make investments in international markets subject to regulatory restrictions. Subscribers to the new fund will be able to exit at or after the age of 60 years by claiming the lump sum amount. However, a minimum 40% of the accumulated wealth would have to be used compulsorily to buy an annuity from an insurance company.


Posted Date: 9/11/2012 1:56:36 AM | Location : United States

Related Discussions:- Pension reforms, Assignment Help, Ask Question on Pension reforms, Get Answer, Expert's Help, Pension reforms Discussions

Write discussion on Pension reforms
Your posts are moderated
Related Questions
Insurance companies The primary purpose of insurance companies is to protect individuals and firms known as policy-holders from adverse events. Insurance companies receive prem

There are two important term structure theories related to the shapes of the yield curve. First is the Expectations Theory and the second is Market Segmentations

BURLEY PLC Financial desirability In a real-terms analysis the real rate of return necessary by shareholders has to be used. This is found as follows 1 nominal rate/1 i

Question 1: i) Discuss the benefits of international diversification and the issue of home country's bias in equity and bonds markets? ii) Explain carefully the currency he

report on Financial Planning and Forecasting

Inventory T ur nover In the accounting, a measure of the number of times that the average amount of inventory on hand is sold within a given time of period. In the o

Q. What is the significance of Working Capital? Meaning of Working Capital: - Working capital management is an significant aspect of financial management. In business money is

These were first issued during a period of extreme interest rate volatility in the late 1970s. Floating-rate bonds, which are also known as variable-rate bonds or simpl

What are some of the primary advantages when a corporation has operations in countries other than its home country?  What are some of the risks? Foreign operations may decrease a

As of November 1, 1999, the exchange rate in between the Brazilian real and U.S. dollar is R$1.95/$. The agreement forecast for the U.S. and Brazil inflation rates for the next 1-y