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IIEF Policy Roundtable on Design & Implementation of Pension Reforms in India , 2002
15 - 17 October 2002, The Oberoi, New Delhi, India
Cosponsored by:
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Jointly Hosted By |
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DAY ONE:
Backdrop (15 October)
An update on pension reform initiatives in India
Gautam Bhardwaj
Director,
Invest India Economic Foundation
Opening remarks: Issues in design and implementation of pension reforms in India
Dr. S.A. Dave
Chairman,
OASIS Foundation
Opening remarks: Implementing a voluntary, privately managed pension system for the unorganised sector in India
H. O. Sonig
Member,
Insurance Regulatory Development Authority
Questions
Pension reforms in other countries: Lessons for India
Reforming India's Civil Service Pensions
Experience of OECD countries with Pension reforms: Lessons for India
Dr. David Lindeman
Principal Pensions Analyst,
OECD Private Pensions Group
Experience of European countries with Pension reforms: Lessons for India
Dr. Denise Lamaute
Senior Pension Reform Advisor,
USAID (Europe & Eurasia)
The role of pension funds in corporate governance
Peter N.C. Davies
Vice Chairman,
The RiskMetrics Group
Questions and panel discussion
Chairman
Dr. S.A. Dave
Chairman,
The OASIS Foundation
Discussants
Anand Bordia
Member (Finance),
National Highways Authority of India
Rajiv Vij
Regional Head (India, Middle East & Eastern Europe),
Franklin Templeton Investments
Sanjay Sachdev
Managing Director, IDBI-Principal AMC
Special address
Dr. S. Narayan
Secretary,
Ministry of Finance, Department of Economic Affairs
Government of India
Questions
New initiatives on existing pension provisions in India
Issues in reforming civil service pensions in India
Prof. Mukul Asher
Professor,
Public Policy Programme, National University of Singapore
New initiatives at the EPFO
A. Viswanathan ,
Additional Central Provident Fund Commissioner,
Ministry of Labour
Exempt provident funds in India
Manish Sabharwal
Managing Director,
India Life Hewitt Limited
Panel discussion & questions
Chair
H.O. Sonig
Member,
Insurance Regulatory Development Authority
Discussants
Deepak Satwalekar
Managing Director,
HDFC Standard-Life Insurance
S.V. Prasad
Managing Director,
Zurich India AMC
Ganga Murthy
Director (Pension),
Ministry of Personal, Public Grievances & Pensions
Investing retirement savings
(15 October)
Investing retirement savings
A key question for pension reformers is where will the funds collected in the defined contribution accounts be invested. The international experience shows that funded pension schemes around the world exhibit a range of investment practices ranging from complete laissez-faire and prudent person rules to strict portfolio limits. Moreover, these rules are often revised as conditions change (magnitudes of the assets rise, supervision becomes more competent, financial literacy improves etc.). The authors will describe these practices in other countries and evaluate their relevance for the case of India, especially in light of its specific capital market conditions.
Dr. P.S. Srinivas and Dr. Susan Thomas
Panel discussion & questions
Chair
Rajendra P. Chitale
Managing Partner, M.P. Chitale & Co.
Discussants
U.K. Sinha
Joint Secretary (Capital Markets & Pensions) ,
Department of Economic Affairs, Ministry of Finance
Government of India
Peter N.C. Davies
Vice Chairman, The RiskMetrics Group
Close of sessions for the first day
DAY TWO:
Collection & recordkeeping
(16 October)
Collection and recordkeeping issues
Defined contribution schemes require constant tracking of individual account balances and flows in a way that may not be currently possible in India. In addition, there are several models of collection of contribution that assign this responsibility to different entities (e.g., employers, clearinghouses, income tax collectors etc.). This presentation will highlight the particular requirements for an effective system of collection and recordkeeping in light of the reforms being proposed in India and will describe practical options. These may include the use of pre-existing infrastructure in order to reduce the costs of implementation.
Dr. Edward Whitehouse
Director,
Axia Economics
Panel discussion & questions
Chair C.B. Bhave
Managing Director,
National Securities Depository Limited
Discussants
A.P. Singh
Director (Financial Services),
Department of Posts, Government of India
C.J. George
Managing Director,
Geojit Securities
Ashwin Bhaskar
Director Operations & Technology - South Asia, MasterCard International
Special Address
Issues and policy directions for pension reforms in India
N. Rangachary
Chairman, Insurance Regulatory and Development Authority
Questions
Costs, fees and charges
(16 October)
The cost of administering private pensions in India
The net rate of return received by individual members of a defined contribution scheme will depend on investment performance as well as the cost incurred by pension providers. This implies a significant tradeoff between accumulations and costs that has been the subject of great debate in other countries that have introduced defined contribution schemes. This paper would review the empirical evidence regarding costs of dc schemes in other parts of the world and highlight issues that would arise in the context of the proposed reforms in India. The authors will also look at empirical evidence of asset management costs in India based on a unique database of Indian mutual funds.
Dr. Edward Whitehouse
Director,
Axia Economics
Panel discussion & questions
Chair
U.K. Sinha
Joint Secretary (Capital Markets & Pensions), Department of Economic Affairs, Ministry of Finance, Government of India
Discussants
R. Krishnamurthy
Managing Director, SBI Life Insurance Company
Shailendra Bhandari
Managing Director, Prudential ICICI AMC
Benefits
(16 October)
Annuity Market in India: Do consumers get their money's worth?
The paper focuses on the analyses of the expected present discounted value (EPDV) of cash flows from the annuity, and the money's worth ratio (MWR), which is the EPDV divided by the initial premium cost. It points to several key weaknesses in the annuities market that need to be corrected to enable the development of a healthy annuity industry in India. It also summarizes some of the key policy choices that must be made to enable it to play an effective role in the broader pension reform.
Renuka Sane
Associates, OASIS Foundation
Taking Benefits from Pension Funds: Annuities and the Alternatives
Annuities are becoming a controversial subject in many countries that require accumulated pension funds to be converted into income by purchasing annuities. With lower interest rates and longer life expectancy the income produced by annuities is falling dramatically. The presentation considers the advantages and disadvantages of annuities as a means of delivering retirement income to those who have built up pension funds; and then considers some of the alternatives
Bob Charles
Fellow of the Institute of Actuaries (London)
and Head of Retirement Benefits Consulting, Watson Wyatt India
Panel discussion & questions
Chair
Dr. R.H. Patil
Chairman, Clearing Corporation of India
Discussants
S. B. Mathur
Chairman, Life Insurance Corporation of India
Rajendra P. Chitale
Managing Partner, M.P. Chitale & Co.
Case Study on SEWA
Experience with pensions, small value transactions, self-help & coverage
Jayshree Vyas
Managing Director, SEWA Bank
Questions
Guarantees
(16 October)
Guarantees on defined contribution schemes: Applications for India
Many of the newly reformed DC schemes around the world carry explicit guarantees designed to reduce ex-post differences in inter-cohort outcomes and/or to mitigate the impact of low investment returns in an absolute sense on retirement income. This paper would review the policy options in this area as well as the international experience in this area. It will highlight the specific issues that would arise in India and the potential costs involved to members of the system and/or the Government of India.
Dr. Ajay Shah
Consultant, Department of Economic Affairs, Ministry of Finance, Government of India
Panel discussion & questions
Chair
Dr. Jaimini Bhagwati
Chief Officer - Market Risk, The World Bank
Discussants
Dr. David Lindeman
Principal Pensions Analyst, OECD Private Pensions Group
Dr. Surjit Bhalla
President, O[x]us Research & Investments
Close of technical sessions for the day
Special Pre-dinner Address
N.K. Singh
Member, Planning Commission
Government of India
Questions
Financial literacy & coverage
(17 October)
Financial literacy and pension reform: the case of India
The purpose of this paper is to describe the informational challenges facing consumers who would participate in a new defined contribution scheme in India. In particular, it will highlight the policy tradeoffs implied by different choices with regard to investment options and number of providers. The authors will draw from the literature on the topic from other country experiences and available data on financial literacy in India.
Gautam Bhardwaj
Director, Invest India Economic Foundation
Panel discussion & questions
Chair
G.N. Bajpai
Chairman, Securities and Exchange Board of India
Discussants
Prithvi Haldea
Managing Director, PRIME Database
Prof. R. Vaidyanathan
Professor of Finance, Indian Institute of Management (Bangalore)
Gautam Chikermane
Executive Editor, Intelligent Investor
Supervision
(17 October)
Supervision and regulation of funded pension schemes
As in the case of the opening of the insurance sector to private providers, the proposal to allow private management of pension funds assets in the context of the proposed reforms would pose a new regulatory challenge for India. This paper will review the options and approaches to regulation and supervision and the international experience with different strategies. The relevance of these models for the specific features of India·s contractual savings sector as well as the need to harmonize different aspects of financial sector regulation will be discussed.
Richard Hinz (Director, U.S. Department of Labor), and Nageshwara Rao (Managing Director, IDBI Capital Markets)
Panel discussion & questions
Chair
Dr. Ashok V. Desai
Consultant Editor, Business Standard
Discussants
Prof. Mukul Asher
Professor, Public Policy Programme, National University of Singapore
Dr. Ajay Shah
Consultant, Department of Economic Affairs, Ministry of Finance
Dr. David Lindeman
Principal Pensions Analyst, OECD Private Pensions
A summary of the B.K. Bhattacharya Committee Report
B.K. Bhattacharya
Chairman, Civil Servant Pension Reforms Committee
Questions
Summary
(17 October)
Conference Summary
H.O. Sonig
Member, Insurance Regulatory Development Authority
Dr. Ajay Shah
Consultant, Department of Economic Affairs, Ministry of Finance, Government of India
Gautam Bhardwaj
Director, Invest India Economic Foundation
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