A quick scan of various pension schemes available in India
Employees’ Provident Fund
The Employees’ Provident Fund (EPF), the largest pension fund in the country managed by the Employees’ Provident Fund Organistion (EPFO), covers about 5,40,000 establishments and has an invested corpus of over Rs.2,00,000 crore. It covers employees in the organized sector, other than government employees, and includes private and public sector enterprises. The EPFO invests nearly 85 per cent of its corpus in the voernment sponsored Special Deposit Scheme (SDS), which gives an annual return of 8 per cent. The EPFO board, which is under pressure to pay out higher returns, declared returns of 8.5 per cent for 2008-09. Since 1995, a part of the EPF corpus is diverted to the Employees’ Pension Scheme which will be paid as monthly pension to the EPF subscriber after retirement. State Bank of India (SBI) was the sole entity managing the EPF corpus. Since last year, the corpus is being managed by HSBC, AMC, ICICI Prudential AMC and Reliance Capital besides SBI. The government has allowed the EPFO to invest 5 per cent of its corpus directly in stocks, another 10 per cent in equity-related mutual funds and the remaining in government bonds. But, the Left parties have prevented the EPFO board from investing in stocks.
General Provident Fund
The General Provident Fund (GPF) covers Central and State government employees. However, new government employees, who joined service from January 1, 2004, will not be entitled to this scheme. The GPF is a defined benefit system as against the defined contribution system of the NPS. The GPF has become burdensome on the government exchequer.
Public Provident Fund
The Public Provident Fund (PPF) is another popular pension scheme. It is a defined contribution system with a tenure of 15 years. The interest rate for PPF is in line with the rate for the government’s small savings schemes.
Other schemes
There are other voluntary pension schemes available for the general public. But they cover a very small segment of the population. All life insurance companies and mutual funds offer pension plans, which regulated by the Insurance Regulatory and Development Authority and the Securities and Exchange Board of India respectively.
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