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Wednesday, August 26, 2015

PFRDA News : Concept Note on Introduction of Retirement Adviser

Population Ageing, which entails an increasing share of elderly people in the population, is a major global demographic trend which will increase rapidly during the twenty-first century. Population ageing is taking place in nearly all the countries of the world. Globally, the number of older persons (aged 60 years or above) is expected to be more than double, from 841 million people in 2013 to more than 2 billion in 2050. According to the Ministry of Statistics, GOI, in India the elderly (aged 60 years or above) accounted for only 7.4% of the population in 2001 which has increased to 8.4% of the population in 2011. While India is ‘young’ with a median age of 25, the proportion of the elderly is set to rise to 10.7% of the population by 2021 against a background of rapid transformation in household structures. In India, average life expectancy at the age of 60 years is approximately 18 years. Lifespan has been increasing due to better health and sanitation conditions in the country. However, the average number of years of employment has not been rising commensurately. The result of this is an increase in the number of post-retirement years without regular income. Therefore it is more critical now than ever before to ensure regular income for life after retirement. The need for retirement saving is thus inherent and a foregone conclusion.
The extended household is changing to a nuclear one, and the elderly are no longer dependent on their children for their financial needs. Other changes, such as the migration from the village to the city, are also leaving many elderly people in rural areas without any family support.
The existing social security schemes cover a very small percentage of working population in the unorganized sector and there is a need of increasing the social security coverage to meet the challenges of increasing life expectancy. An increase in life expectancy has created an imperative for consumption leveling and retirement savings.
With the rapidly rising retiring population across all sections of society, accompanied by the decline of the traditional family support structure, the need of the hour is an old age income security programme.

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