Implementing an Inclusive and Equitable Pension Reform—Lessons from India's New Pension Scheme

India is ageing. One response of Indian policy makers has been introduction of the New Pension Scheme (NPS), a defined contribution pension scheme which is mandatory for civil servants and voluntary for the rest of the population. Given the size of the target population, even if take-up is modest, NPS savings may soon provide huge amounts of capital to India's economy. However, challenges are abound. What governance structure will best achieve the ultimate policy goal of serving the needs of savers? What business processes and information technology design will serve members best? How effectively will the NPS attack the problem of old-age poverty?

In this book, a multi-disciplinary international team, comprising of economists, lawyers, pension management experts, and capital market experts, explore these and other questions. The book proposes significant legal, regulatory, and governance reforms for the NPS and other existing pension schemes, as well. It finds that current NPS business practices cannot keep pace with potential growth of the system and makes suggestions on how to take better advantage of information technology. Based on review of experience elsewhere and state-of-the-art economic-demographic modelling, it warns that the NPS in its current form does not address the retirement income needs of the lifelong very poor, suggesting that it is only one in a range of responses needed to cope with the challenges of population ageing in India.

Cheolsu Kim, an economist, is currently principal financial sector specialist, South Asia Department at the Asian Development Bank (ADB), Manila, Philippines. He has served various posts in ADB including in the India Resident Mission and the Private Sector Department where he was responsible for finance sector and capital markets development and reforms in various developing member countries.

Landis MacKellar is an economist specialising in economic demography and the economics of the social sector. From 1999-2004 he was leader of the Social Security Reform Project at the International Institute for Applied Systems Analysis, in the context of which the volume Economic Impacts of Population Ageing in Japan (Edward Elgar, 2004) was produced.

Russell Galer is an attorney and consultant specializing in pension and savings policy and related legal and regulatory issues, including the regulation of financial institutions and services. In addition to his international consulting practice, Mr. Galer is currently the General Counsel of Emeriti Retirement Health Solutions, a consortium of U.S. universities formed to finance and provide retiree health insurance for university employees.

Gautam Bhardwaj is director of Invest India Economic Foundation (IIEF). In 2000, he co-authored the OASIS Report that provided the blueprint for India's current pension reform. Over the last decade, he has served as an advisor to India's Ministry of Finance on pension policy, legislative, regulatory and implementation issues.