Pension reforms, Financial Management

Assignment Help:

Pension Reforms

On January 1, 2004, Pension Funds have come into force in India. Government servants will have to subscribe to them. The new pension fund system is primarily drawn from the OASIS report. It proposes a phase-out of the Provident Fund scheme in order to eliminate competition for the new fund to help it grow its corpus. Slowly, the new pension scheme will completely replace all the retirement fund schemes presently available. The new system will be initiated by setting up a Pension Fund Regulatory and Development Authority (PFRDA). The immediate job at the authority's hand would be to issue licenses to Pension Fund Managers (PFMs.)

Under the new system, there would be no assured returns to the pensioners. New government employees are expected to part with 10% of their salary and Dearness Allowance (DA) to one of the PFMs. The government too will make a matching contribution. Pensioners can choose from among three pension schemes - safe, balanced and growth.

PFMs, however, would have the freedom to make investments in international markets subject to regulatory restrictions. Subscribers to the new fund will be able to exit at or after the age of 60 years by claiming the lump sum amount. However, a minimum 40% of the accumulated wealth would have to be used compulsorily to buy an annuity from an insurance company.

 


Related Discussions:- Pension reforms

What is the meaning of financing decision, What is the meaning of Financing...

What is the meaning of Financing decision Financing decision of a firm relates to choice of the proportion of these sources to finance investment requirements.

Role of securities firms in investment intermediaries, What is the role of ...

What is the role of securities firms in investment intermediaries? Securities firms assist within the trading of existing securities into the secondary markets. The two major c

Cases let, How would you judge the potential profit of Bajaj Electronics on...

How would you judge the potential profit of Bajaj Electronics on the first year of sales to Booth Plastics and give your views to increase the profit.

Coupon rate, Bonds pay interest periodically at a pre-specified rate ...

Bonds pay interest periodically at a pre-specified rate of interest. The annual rate at which this interest is paid is known as the coupon rate or simply the coup

Straight line depreciation, Alger Corp wants to buy some construction equip...

Alger Corp wants to buy some construction equipment for $50,000, which has a useful life of 4 years with no salvage value. Alger uses straight-line depreciation. Alger has a tax ra

Compute the market price of walters model, The earnings per share of a comp...

The earnings per share of a company is Rs 8 and the rate of capitalization applicable is 10%. The company has before it, an option of adopting i) 50,ii) 75 iii) 100 per cent div

Differentiate between systematic and unsystematic risk, QUESTION a) Dis...

QUESTION a) Discuss the importance of diversification in the context of stock markets using appropriate numerical illustrations. b) Mimine and Minush are two companies with

Quantitative analysis, Your task is to prepare a presentation for a group o...

Your task is to prepare a presentation for a group of board members who are considering an investment of $100 million in your company. Your presentation will consist of three disti

Interest rate risk for floating-rate securities, In a fixed-rate coup...

In a fixed-rate coupon bond, the change in the price can be attributed to the change in the market interest rates. This change is due to the difference in the pre

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd