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.