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

Relationship between financial decision making and risk , Discuss the relat...

Discuss the relationship between financial decision making and risk and return. Would all financial managers view risk-return tradeoffs similarly

Determine the example of future value of an annuity, Determine the example ...

Determine the example of Future Value of an Annuity An annual payment of 7000 $ is invested at 5% per annum compounded yearly. What will be the amount after 20 years? Solut

Employee benefit plan, Employee Benefit Plan - Compensation arrangement, u...

Employee Benefit Plan - Compensation arrangement, usually in writing, used by employers in addition to wages or salary. Some plans like group term life insurance, medical insuranc

Credit risk, A bond investor is always exposed to credit risk. Credit...

A bond investor is always exposed to credit risk. Credit risks can be classified into three types. They are: Default Risk Credit Spread Risk

Assets, Assets Pension insurance companies' assets can be divided into ...

Assets Pension insurance companies' assets can be divided into five main investment classes: cash, long-term bonds, stocks, property and loans. The total returns on the assets

Dividend payout ratio, Dividend Payout Ratio The percentage of earnings...

Dividend Payout Ratio The percentage of earnings or profit paid to shareholders in dividends. Computed as:   The payout ratio gives an idea about how well earning

Regarding the assigment below, a-ii, should i calculate the co-variance of ...

a-ii, should i calculate the co-variance of the 30 securities?

Features of government securities, Features of government securities: ...

Features of government securities: Issuers The government securities are issued by the central government, state governments, and semi-government authorities like municipa

Securities and exchange commission of usa, SECURITIES AND EXCHANGE COMMISSI...

SECURITIES AND EXCHANGE COMMISSION OF USA In the United States, securities industry is regulated by the United States Securities and Exchange Commission (SEC). It is the govern

Define intermediation, Define intermediation The financial system makes...

Define intermediation The financial system makes it probable for surplus and deficit economic units to come together, exchanging funds for securities, to their mutual advantage

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