The Hindu Business Line : `Pension reforms will unleash big economic gains'

New Delhi April 8 Pension reforms hold the prospect of enlarging the market size to Rs 4,06,400 crore by 2025, from Rs 56,100 crore in 2002, according to a FICCI-KPMG paper on pension reforms.

The overall economic gains would be substantial as the mobilisation of assets would lead to effective investments in the stock, bond and mortgage markets, thus supplying the capital to finance corporate growth, government infrastructure and housing through market choice.

The need for reform arises from the various challenges and concerns with respect to the existing pension provisions in India, which provides coverage to only about 10 per cent of the country's labour force.

The need for reform also arises because of low-income levels of a large population base and inadequate income generation by existing programmes for retirees to cover risks of longevity and inflation.

"Since the capital market and pension sector are closely related, it will become necessary to undertake capital market reforms along with pension reforms," says Mr Habil Khorakiwala, President of the Chamber.

For a pension system to be sustainable, the regulator will have to play more of a developmental role, wherein they would enforce present regulations and enact new ones if necessary.

It would also require a strong regulatory framework for the legal, financial and administrative matters, according to the paper

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