The oasis report, Financial Management

The Oasis Report

Amidst all these problems, the Ministry of Social Justice and Empowerment constituted a committee with a view to improve old-age social security in the country headed by the seasoned investment professional, Dr. Surendra A Dave, a former Chairman of Unit Trust of India.

The committee submitted the report, aptly named ‘Project OASIS' (Old Age Social and Income Security) initiated a change that led to a massive overhaul of the pension system in India, in October 2001.

The Oasis report targets a new pension system in which-

  1. Every person should be able to save regardless of where he/she lives (rural/urban) and where he/she works (organized/unorganized sector).
  2. The ability to save should be made available to him/her throughout his/her working life.
  3. An individual should be able to constantly ‘see' his/her notional monies regularly.
  4. The individual should have a say in the management of his/her savings.
  5. The pension system should ensure an old age safety net for the individual.

A nation-wide recordkeeping system will accomplish the first three goals. Here, every individual saver will have a unique Individual Retirement Account (IRA). This IRA will remain with the saver regardless of where he/she works, in the organized or unorganized sector. Post offices throughout the country are proposed to be made Points of Presence (POPs) for the collection of savings and disbursement of pensions.

As for the fourth target, pension fund management organizations are to be set up. Fund managers will manage the huge savings of the millions of savers through three management styles - "Safe Income", "Balanced Income" and "Growth" styles of fund management. The committee proposes six fund managers for each of the three styles, providing for 18 fund managers in all.

The committee targets the fifth goal by recommending that, upon retirement, the individual would be able to use his/her pension assets (part or whole thereof) to buy annuities from annuity providers, and obtain a monthly pension.

The OASIS report recommends the following measures:

  • Establishment of the Indian Pensions Authority (IPA).
  • Development of a detailed blueprint of the processes in the pension system and how they would be implemented by various participating agencies (including banks, the postal system, etc.).
  • Establishment of a depository which can harness the institution building that has already taken place in India in this area.
  • Registration of POPs, the SRO for Retirement Advisors (RA), and the PFM.
  • Full IT integration among IPA, Depository, POPs, PFMs and RAs, and a detailed testing of this integration.
  • Commencement of education effort for employees to enable them to appreciate the need for the pension system through the involvement of NGOs.
  • The report, however, asks for the following contingent liabilities upon the Central Government.
  • A second-tier safety net in case the IPA is unable to implement the relative returns guarantee using collateral from the PFMs.
  • A second-tier safety net for the contribution protection insurance to the extent that the guarantee cannot be implemented through insurance companies.

 

Posted Date: 9/11/2012 1:56:09 AM | Location : United States







Related Discussions:- The oasis report, Assignment Help, Ask Question on The oasis report, Get Answer, Expert's Help, The oasis report Discussions

Write discussion on The oasis report
Your posts are moderated
Related Questions
In this exercise you will construct efficient portfolios with 5 risky assets using Excel's non-linear optimization routing "Solver". The questions are designed to be sequential and

CLASSIFICATION OF SOURCES OF FINANCE In the market, there are several sources of finance, with conflicting risk characteristics and with conflicting cost structures. Numerous m

Q. What is Installment Credit? This is another method by which the assets are purchased and the possession of goods is taken immediately but the payment is made in installments

What is an LBO? What are the risks for the equity investors and what are the potential rewards? A leveraged buyout is a buy of a publicly owned corporation by a small group of

AThe project is expected to have an initial outlay of $200million and generate cash inflows of $64million for the next 12 yearssk question #Minimum 100 words accepted#

FEATURES OF A BUDGET a.         It is prepared for a specific period. b.         It is expressed in quantity or money or both. c.         It is a statement describing ob

1.  Suppose Bank one offers a risk free interest rate of 5.5% on both savings and loans, and Bank Enn offers a risk free interest rate of 6% on both savings and loans. What arbitra

Assemble all other inputs/assumptions based on the past data. Use your best judgment to have the most reasonable estimates. Tasks 1. Prepare an Excel spreadsheet containi

What are the main classes of institutions that issue bonds in the USA? There are three major classes of institutions which issue bonds in the USA: national governments, local g

Q. The main rationale for the objective of wealth maximization is that it shows the most efficient use of the society's economic resources and therefore leads to a maximization of