While old peoples’ home is a shelter for many, it offers a viable investment opportunity for many others, especially the government
In the previous article—FDI in pension: What purpose can it serve? (please click here
to read the article), we briefly covered the issue of the government’s move to open the pension sector for Foreign Direct Investments (FDI) as it has been felt that this move will bring in much-needed capital for its expansion. Infusion of capital, whether it is indigenous or imported, will be useful as long as clear plans are made for their need and utilization.
According to the statistical data available, the majority of the work force or a staggering 87% do not have pension cover at the moment. In most organizations, offer is made to the permanent employee to take up both provident fund and pension, but most choose provident fund simply because it is easily transferable to the new employer, in case of change of jobs.
Psychologically, however, as pension refers to the age-group of 55 years and above, to get the benefits, this puts off most people from diverting part of the very meagre savings, month after month, for this purpose.
Besides, within the inadequate income one gets, a lot of other priority areas of allocation, such as medical insurance, children’s education, marriage, and other essential monthly commitments take away bulk of the earnings, thus leaving very little room for pension, unless it becomes mandatory. Most people are satisfied with provident fund contribution.
In any case, the issue is how can the pension amounts be utilized in order to give an assured return to the payee? At the moment, under the New Pension Scheme, anyone between the ages of 18 and 55 years can participate and advice the fund manager to utilize pension amount in various investment mixes. It could be in equity (maximum of 50%) or in debt in different forms.
Also, there are a number of avenues open under the NPS that may be suitable for one’s needs, but participating in NPS has been made mandatory for government employees.
All these are fine and do give protection to the pensioner in his or her golden years after retirement. But, then, can we now look at this issue of NPS in a different way?
Statistically, our ageing population, i.e. citizens over 60 years of age, as per the 1991 Census was 56.7 million people. As at 2011, this figure is projected to have reached 99.2 million and the estimated population of retirees by 2021 will be a staggering 140 million. So, we have to start thinking in terms of what would be required to make these people happy and satisfied in their golden years, and provide them with reasonable comfort after retirement?
One of the biggest problems we face today is the growing tendency for the disintegration of the joint family system that we have traditionally followed in our country. The present generation is already branching out to set up their independent families, leaving their ageing parents to fend for themselves, sometimes extending financial support and help and most of the times with no help at all, claiming that they have “too much responsibility” to take care of their own families!
In other words, we are slowly copying the western culture of packing off parents to old peoples’ homes which are now springing up all over the country. For many, it is a new area of investment and good return.
Frankly speaking, this change in attitude and behaviour has come about in the last ten years due to a great number of Indians settling abroad in USA, UK, Canada and Europe, and learning from their local experience!
Perhaps the time has come for the government to seriously consider diverting some 30% of the pension amount collected and establish and develop government-sponsored old peoples’ homes with supporting infrastructure and medical facilities in all the cities in the country. Each state must provide the land and basic facilities and the pension collected from that region should be used for setting up such operations.
In fact, the methodology to be used for the government-sponsored old peoples’ homes will have to be worked in detail but such a project must be included in the Twelfth Five Year Plan, by making a priority provision.
Such a move will enable great revival of economic activity in the country; building and construction industry will get a boost; steel and cement industries will have huge orders to tackle; other facilities to generate power, road construction, etc will get good support, besides employing thousands of people in these activities.
Each state will have several such townships because we have to take care of the retirees who are helping to building our country today, and they need our support tomorrow when they retire!
has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at [email protected]