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India’s Prime Minister Manmohan Singh and Finance Minister Palaniappan Chidambaram asked for the chief ministers’ of the states to provide support for the new pension scheme for the government of employees of India. Both Manmohan Singh and Chidambaram joined the conference on Pension Reforms held today. The conference was attended by External Affairs Minister Pranab Mukherjee, Defence Minister A.K. Antony, and Home Minister Shivraj Patil. I am quoting from the report published in The Financial Express:

India wants a new pension scheme for government employees to start investing a portion in stock markets, while legislation is pending in parliament.

Addressing a pension fund conference of state chief ministers on Monday, Finance Minister Palaniappan Chidambaram said the rules governing non-government funds will be adopted for the new pension fund.

Currently, private pension funds can invest up to 5 percent of their corpus in equities.

India made it mandatory from Jan. 1, 2004 for new government employees to contribute 10 percent of their salary to a new pensions scheme, an amount the government would match.

This new pension scheme is an effort by the government to decrease its pension expense. However, a new bill that would allow the foreign companies to manage the pension funds is pending in the parliament.The Left parties under United Progressive Alliance (UPA), which is the ruling party, opposed the bill. At present, seventeen states have introduced this new pension scheme.

In many developed countries employees have the option to buy stocks with a portion of their retirement funds. It helps to increase the money of the employees in the long run. I think Indian ministers and other government officials should support this new scheme. What do you think?

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