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The Committee was mandated to make concrete recommendations for actions that the Government of India could take so that "every young worker can build up a stock of wealth through his or her working life, which would serve as a shield against poverty in their old age".
In its report, the Project Oasis committee made bold, radical recommendations to restructure the pension system and align it with the future needs and aspirations of the people. The main recommendations are as follows: -
Individual retirement accounts, IRA, will be created.
He/she would make voluntary contributions into this account throughout his/her work life.
Since the contributions are voluntary, distribution channels will play an important role.
Contributions may be small amounts. Hence, accounting will have to be safe and proper.
A key feature of the system is points-of-presence or POPs - to ensure easy access. Post-offices and bank-branches will be POPs to start with. All transactions of IRA will be done through these POPs anywhere in India.
Individual accounts will have full portability - IRA can be carried across job changes and different locations.
Record keeping will be centralized and there will be a central depository.
Six pension fund managers have been recommended, who may bid for five years.
Central depository will transfer blocks of funds to pension fund managers.
Individuals could change funds managers if they are not satisfied with their performance.
For premature withdrawals from the fund, disincentives have been recommended.
Awareness programs through non-government organizations or NGOs and other welfare associations have to be in place as the targeted market may include literates and semi-literates.
The pension fund manager will offer schemes of three styles - safe income, balanced income, and growth.
Favourable tax treatment for contributions, funds and annuity payments.
The Pension Authority would regulate pension markets.
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* Contributed by -
Arpit Bhadani & Ashwani Gupta,
PGDBM 2006,
IMT, Ghaziabad.
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