NEW DELHI, July 22:With more and more working people join organised sector, India’s pension fund market is set to grow at a rapid pace to reach about Rs 20 lakh crore by 2015 from present level of about Rs 15.40 lakh crore, industry body Assocham said today.
Pension fund market in India is growing at a compounded annual growth rate (CAGR) of about 10 per cent according to a study titled ‘Financial Markets: Time for Next Generation Reforms’ released by Assocham.
There is enormous potential for pension market in India as over 30 crore working age employees in the country lack formal pensions which are limited to government workers and to companies that employ more than 20 people while over 80 per cent of India’s working population is in the unorganised sector without the regular salary and benefits of formal employers, according to the chamber’s study.
“Pensions comprise of one of the largest components of government expenditures and are set to increase further,” Assocham secretary general D S Rawat said while releasing the study.
“There is a huge scope for growth in India’s pension fund market owing to a low existing coverage and large workforce in the unorganised sector, vast majority of which has no pension which also provides massive opportunities for the private sector and foreign players to enter the pension market in India,” said Mr Rawat.
“Large scale reforms are required to ease pressure on the treasury, to provide for a social security net for growing numbers of senior citizens as well as a growing workforce as only about 12 per cent of the working population in India is covered by some form of retirement benefit scheme.”
Amid other growth drivers which make India a potential market for the pension fund industry include – favorable savings pattern, growing life expectancy, growing desires for better living standards after retirement and government initiatives vis-a-vis pension reforms and the New Pension Scheme (NPS).
(UNI)
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