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

Management of sundry debtors, Management of Sundry Debtors: SUNDRY - M...

Management of Sundry Debtors: SUNDRY - Miscellaneous infrequent or small customers that are not given individual ledger accounts but are classified as a group. SUNDRY CREDI

Government bonds, Government securities are the most important and un...

Government securities are the most important and unique financial instruments in the financial markets of any economy. Government of India Securities (GOI Sec) in

Value of a warrant, Value of a Warrant: The market price of a warrant f...

Value of a Warrant: The market price of a warrant fluctuates between minimum and maximum limits. When the current market price of the stock Ps is greater than the exercise pri

Determine the value of the forward contract, Mr. Lam holds title to an asse...

Mr. Lam holds title to an asset worth €125.72. In order to raise money for an unrelated purpose, he plans to sell the asset in nine months. But Mr. Lam is concerned about the uncer

maximization of a company''s share, a. The primary financial objective of ...

a. The primary financial objective of a company is the maximization of the wealth of shareholders ...per corporate finance theory.    Though, this objective is usually replaced by

Determine the wealth maximisation decision criterion, Wealth Maximisation D...

Wealth Maximisation Decision Criterion This is also called as value maximisation or net present worth maximisation. Presently academic literature value maximisation is almost u

Cash flow duration, Cash flow duration, like effective duration, cons...

Cash flow duration, like effective duration, considers the change in the cash flow due to prepayment with the change in the interest rate. In effective duration,

Matching or accrual, Matching or Accrual   The accrual concept makes...

Matching or Accrual   The accrual concept makes a distinction among the receipt of cash and the right to receive it, and the payment of cash and legal obligation to pay it.

Monetary policy, Monetary Policy The Federal Reserve's goal is to regul...

Monetary Policy The Federal Reserve's goal is to regulate the growth of the monetary aggregates to ensure sufficient credit expansion to foster economic growth, without inflati

Explain takeovers obligation, Takeover, Inc. is a Delaware corporation whos...

Takeover, Inc. is a Delaware corporation whose only stated purpose is to acquire companies.  It has virtually no assets and no employees other than the original founders who contri

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