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A study of 129 domestic and multinational companies has revealed that only one-fifth of Indian employers offer retirement pension schemes to their employees.
According to a study by Vantage Health & Benefits Consulting Pvt Ltd, only 19 per cent of the companies offer defined contribution superannuation schemes to their employees. Superannuation schemes mainly consist of pension schemes offered by the National Pension Scheme and group gratuity schemes offered by insurance companies.
Sudip Mukhopadhyay, Managing Partner of Vantage Consulting said, “In a country with no social security schemes, it is a matter of concern that majority of the companies have kept themselves confined to statutory requirements for retirement benefits.”
The survey says a 30-year-old married person, intending to work till 65, will need to save 30 per cent of his annual pre-tax salary every year to ensure that he has funds that will last till he is 90.
He said that after the introduction of the fringe benefit tax, whereby companies are taxed on the retirement plans, most companies withdrew the schemes.
The poor distribution network of the National Pension Schemehas deterred the popularity of these schemes, said Arvind Laddha, CEO and Founder of Vantage Group. He added that lack of group gratuity plans by private life insurers, due to the regulatory requirement of providing a non-zero rate of return on pension products is also a deterrent.
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