As per the PFRDA-CRISIL report titled, Financial security for India’s elderly - The imperatives, India will begin ageing gradually and transform from ‘young’ to a ‘greying’ with every 5th
Indian to be in 60s in contrast to every 12th person at present.
By 2050, persons above the age of 60 would increase from the present 8.9% of the population to 19.4 %.
Also, by 2050, the population of people above 80 is likely to increase from 0.9% to 2.8%.
As of 2015, almost 90% of the population was below the age of 60 years and the proportion of working age population stood at 44% .
The report has stated that the continuously declining inter-generational support within families necessitates the development of well-developed, self- sustaining pension system in the country.
The report calls for including personal finance and retirement planning as a part of formal education curriculum as they promote the overall objective of financial literacy.
The promotion of pension system is vital as it helps in achieving twin objectives of providing income security to a vast number of ageing population.
It also assists in garnering long-term funds for critical, growth-driving sectors of the economy as also the capital market.
The report has called for sufficient incentivisation of intermediaries to increase penetration of pension system in the country.
In India, which is an under-penetrated financial market has most of the investors preferring to invest in fixed deposits (FDs), which account for more than 44% of the financial savings as opposed to the provident and pension funds which accounts to just 14% of the savings that are primarily fed by the organised section of the society.
The report has observed that in India, increasing the penetration of pension products via voluntary pension schemes is the biggest hurdle in developing the pension system.