Proactive and policy interventions can help avert an impending pension crisis, acccording to a whitepaper on challenges of employer related pensions in India. The report has been brought out by KPMG in India and the Federation of Indian Chambers of Commerce and Industry (FICCI).
The report titled ‘Employee pensions in India – current practices, challenges and prospects’, was launched today at FICCI’s annual conference on the pensions sector in India.
The key stakeholders -- Government, regulators, employees and employers -– should engage in a focussed and constructive discussion to explore ways to broaden pension coverage in India and build a robust pension system, the report said.
For the white paper, KPMG in India conducted an employer pension plans survey this year to seek inputs from company representatives from diverse sectors (consumer markets, energy and natural resources, healthcare, hospitality, retail, private equity, automobile and IT/ITeS, among others).
The survey highlights that pension should relate to existing salary levels and also must protect against inflation post-retirement.
In terms of tax benefits, it is important to consider higher tax deductions and more tax benefits to NPS. The need for clear communication to all employers/ employees on pension schemes and their benefits is also emphasised.
The survey reveals that 91 per cent of the surveyed companies contribute PF on full basic salary, while nine per cent contribute on the statutory limit of Rs 15,000. However, only 40 per cent respondents organise awareness sessions/ workshops for imparting information on retirement planning.
While a majority of the respondents believe the current plans in place are adequate (56 per cent), a significantly large population (44 per cent) feels that more can be done to provide for their employees’ retirement planning.