Pension alert: Even the unified scheme could acquire a sell-by date over time
shorturl.at/8Ze9p) has pointed out that during the 2024 Lok Sabha polls, the BJP’s share of postal ballots in these four states had reduced from its 2019 level, providing some indication of displeasure with the pension system. Postal ballots are mostly cast by senior citizens, persons with disabilities, government officials either on poll duty or serving in locations removed from their constituencies, consular staff in overseas locations and defence personnel. The sharp reduction in the share of postal ballots must have given the BJP think-tank a reason to pause and reconsider its considered stand on pension.
But there is a larger issue at play here. While the BJP’s actions might betray political expediency, or demonstrate a willingness to jettison ideology for realpolitik, a deeper systemic malaise could blunt even the UPS’s utility over time. Deepak Mohanty, chairman of Pension Fund Regulatory and Development Authority, provided a clue during a recent speech: “India ranked 45th out of 47 countries in the Mercer CFA Institute Global Pension Index-2023.
The Index measures the efficacy of a country’s pension system on three parameters; our scores were: on Adequacy (41.9), Sustainability (43) and Integrity (56.5). The scoring denotes that our pension system is reliable but lacks in providing adequate replacement income." The former central banker has a valid point. Most pensioners need adequate post-retirement income to meet daily livelihood requirements, which include more frequent healthcare bills.
But, investments have not been yielding much. Mohanty’s same speech gives a break-up of the NPS investment pattern: 54% in government bonds, 24% in corporate bonds and 19% in equity. With 78% of investment locked in
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