Securing nest eggs
Economic security in old age has been a growing concern in urban India
Economic security in old age has been a growing concern in urban India.
The burden of risk in the old defined benefit pension was on the employer, be it the government or some parts of the private sector. This has increasingly been shifted to the employee in the transition to defined contribution schemes. So what you get in old age depends on how much you put into the kitty during your working life.
The problem is that the employees who now have to carry the burden of funding their autumn years do not have the freedom to decide how the money they are putting aside for retirement will be invested. That is decided by the government. Most of it is mandatorily invested in bonds rather than equities, although globally around half of retirement funds goes into equities. It is against this backdrop that the recommendation by a committee headed by G.N. Bajpai to give National Pension Scheme subscribers greater freedom on asset allocation is welcome.
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