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IRDA Report
In 2001, the Ministry of Finance directed the Insurance Regulatory and Development Authority, IRDA, to prepare a blue print for the pension reform process in India. A Committee was formed to decide upon the implementation details.
In line with the recommendations of OASIS, it was decided that the pension system would comprise of four components - the point of presence, the pension fund manager, the depository, and the annuity provider. It was emphasized that there is also the need to devise a scheme for the unorganized sector.
The Must-Dos for the Success of Pension Funds
Some of the critical issues, which have to be addressed successfully for development and growth of Pension funds in India, are: -
The unorganized sector has to be brought into the Pension Fund framework, as there lies a huge untapped potential.
Costing and credibility of the Fund Managers will play critical roles.
Acceptability of long-tenure funds in India is yet not tested fully. So necessary precautions are to be taken for Pension Funds as well.
Public-private participation model has to be there with proper balance and coordination.
FIs, banks, mutual funds and insurance companies with vast network and reach are well-suited to participate in the Pension Fund market and hence to be attracted and supported with transparent and clear legal framework.
Concluded.
* Contributed by -
Arpit Bhadani & Ashwani Gupta,
PGDBM 2006,
IMT, Ghaziabad.
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