Well-governed pension pool can contribute towards Viksit Bharat: CEA Nageswaran
New Delhi, June 30
Chief Economic Advisor V. Anantha Nageswaran said on Tuesday that a deep and well-governed pension pool can contribute to the creation of a Viksit Bharat by supporting growth-oriented investments while ensuring liability-aware returns for subscribers.
Addressing an event organised by Pension Fund Regulatory and Development Authority (PFRDA), he said that pension funds can play a vital role in building infrastructure and supporting India's Viksit Bharat at 2047 journey.
"The truer measure of a developed society is whether security and dignity in old age are broadly shared," he said.
He further stated that the funding gap has long plagued Western pension funds and narrowed somewhat as interest rates moved away from the zero-flow environment.
"However, a subtle risk has emerged," he told the gathering.
Citing gold as an example, the CEA said for a country like India, the yellow metal carries balance of payments consequences that a domestic liability fund should really tackle.
He stressed that chasing higher returns at the cost of pension promises was a risk that pension systems cannot afford.
Meanwhile, PFRDA Chairperson S. Ramann said the authority is set to roll out the NPS Swasthya product in the next two months or so.
Health insurance companies will soon be able to offer top-up health cover to National Pension System (NPS) subscribers via tie-ups with the PFRDA.
The PFRDA board has already approved the product, and the regulator will soon issue a circular detailing its standard operating procedure (SOP). "The pension funds will tie up with the insurance companies for providing top-up health insurance. That is the bundling of NPS Swasthya," Ramann said on the sidelines of the event.
Last month, PFRDA unveiled a major overhaul of post‑retirement options under India's National Pension System (NPS), allowing retirees to take periodic payouts from the withdrawable portion of their corpus. The new framework introduces a drawdown facility that lets subscribers opt for monthly, quarterly,or annual payouts from the lump‑sum portion retained under NPS.
— IANS
Reader Comments
Interesting perspective from the CEA. Having worked in finance in the US for 20 years before returning to India, I've seen how Western pension funds struggled with underfunding for decades. India is smart to learn from those mistakes. The 'NPS Swasthya' with bundled health insurance is a great idea – healthcare costs are the biggest retirement risk, especially for my parents' generation who didn't have proper coverage. Hope the returns are competitive though.
CEA Nageswaran makes a valid point about gold. We Indians love our gold, but it's not productive investment for pension funds – it just sits in lockers! I wish more people understood that NPS equity investments actually help build the nation's infrastructure. My father still doesn't trust anything except fixed deposits and gold. But this new drawdown facility sounds promising – monthly payouts from the corpus could change the game for retirees like my parents.
Good intentions but devil is in execution. The CEA says 'well-governed' pension pool – but have they seen how some state government pension funds are managed? With politicisation and corruption, I'm skeptical. Also, the NPS Swasthya top-up health cover – hope the premiums are reasonable and claim settlement is smooth. Insurance companies in India have a notorious reputation for denying claims. PFRDA needs strong oversight.
As someone who manages my elderly parents' finances, I appreciate the holistic approach here. The phrase 'security and dignity in old age are broadly shared' really resonated with me. My mother is 72 and my father is 78 – they depend on pension income. The drawdown facility with monthly payouts would have been perfect for them when they retired. But I worry about the younger generation – with inflation and job uncertainty, will they have enough to contribute meaningfully to NPS?
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.