PHDCCI suggests the govt to evolve a pension model

NEW DELHI: PHD Chamber of Commerce & Industry (PHDCCI) has suggested the government to evolve a pension model for the country, which should allow full range of service providers including banks, mutual funds and insurance companies to enter the pension business.

"These organizations can play a pivotal role due to their inherent strengths and proven capability for long term servicing," it said in a representation to the finance minister. The intended model should provide for liberal investment guidelines including investments abroad under regulatory supervision for these providers.

Well defined entry norms, regular inspection of the pension, providers to ensure compliance, accurate record keeping and suitable firewalls may be erected to ensure compliance to investment guidelines, it said. A proactive legislative framework be worked out for the purpose which should provide support through combinations for compulsions and incentives under occupational schemes.

A Universal Safety Net be created which would cater to the organized sector, unorganized sector, self-employed workers and groups having low life time earning, it added. The model should create huge tax incentives for voluntary and mandatory investments in pension plans under Income Tax Act and should give the members choice of products including some guaranteed products, bonds, balanced and equity fund.

There is need to reform the existing EPFO through suitable technical support, greater transparency and embracing modern fund management skills along with greater member empowerment.

PHDCCI has also suggested setting up a pension research centre to enhance the literacy levels in pension economics, introduction of pension economics and social security administration courses in a few select universities.