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In comparison to these schemes, Pension Funds are professionally managed by capable Fund Managers and state has no or very less control over asset management. Further, real rate of returns are much higher for these funds and the saver has much more flexibility in terms of choosing the contribution amount, the fund manager to manage his funds, etc.
Regulations Related to Pension Schemes
The principal regulation related to Pension Schemes is as follows: -
Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 (xiiic) of the Income Tax Act, 1961
20% tax rebate for individuals with income upto Rs. 1.5 lacs
15% tax rebate for individuals with income between Rs. 1.5 lac and Rs. 5 lacs, for investments upto Rs.70, 000
Reforms in the Pension Fund Market
OASIS Report
The rag-tag pension system that prevails in India is hopelessly inadequate to address the problems discussed above. To address this failing and make recommendations to rectify them, the Ministry of Social Justice and Empowerment commissioned a national project titled OASIS (Old Age Social and Income Security) and nominated an eight-member Expert Committee in 1999.
The primary aim of the Oasis report was "to recommend a pension system which enables individuals to attain old age security at the price of modest contribution rates through their working career".
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* Contributed by -
Arpit Bhadani & Ashwani Gupta,
PGDBM 2006,
IMT, Ghaziabad.
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