New Delhi: How to build a pensioned society? What is mood of the Indian Inc for creating an ecosystem for a pensioned society? In an effort to gauge India Inc’s response to the Union Government’s initiative to lead India towards being a pensioned society, Willis Towers Watson conducted this pioneering study aimed to understand the current thinking amongst employers and plans to address related developments.
Eighty percent of India Inc. opined that the government should make retirement benefit plans more tax friendly in order to improve employee participation. 70% feel increased employee education is needed, while 59% suggest making access to plans simple and easy. These are some of interesting findings revealed by Willis Towers Watson.
Employees’ Provident Fund (EPF) is seen as a strong pillar in supporting retirement adequacy goals with 59% suggesting widening its scope. At the same time, the National Pension System (NPS) continues to draw the attention of Indian employers with 67% suggesting making it compulsory. The study cautions that while NPS and EPF are designed for fundamentally distinct purposes, 57% companies want the government to provide employees an option between the two, whereas 54% suggest merging them.
Kulin Patel, Director, Willis Towers Watson, said, “Recent Government initiatives around driving pension adequacy are a step in the right direction and what is now required is implementation guidance. The study findings clearly indicate that employers are seeking greater clarity from the Government around the role and interlinkages between various schemes like EPF, NPS and Superannuation.”
The study also found that there is an increased employee interest around NPS with two-third employees frequently or occasionally seeking information around it. One in three surveyed organisations currently offer NPS and as many as 70% of those not offering, plan to implement it in the near future. Companies cited ‘project planning and POP selection’ and ‘understanding plan design against tax rules’ as the top challenges in rolling out NPS.
Kulin Patel further said, “With all new Central and State Government employees (after respective cut-off dates) now part of NPS and an increased interest in the private sector, NPS will play a pivotal role in driving retirement adequacy. India Inc. is well advised to improve their overall understanding of the product, assess employee needs and identify specialised assistance areas for a smooth roll out.”
The survey was conducted across sectors during April to May 2016 and drew responses from 118 companies and senior leaders.