Financial Market Implications of India’s Pension Reform

Author/Editor:

Helene Poirson Ward

Publication Date:

April 1, 2007

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

India's planned pension reform will set up a proper regulatory framework for the pension industry and open up the sector to private fund managers. Drawing on international experiences, the paper highlights pre-conditions for the reform to kick-start financial development, including: (i) the buildup of critical mass; (ii) sufficiently flexible investment guidelines and regulations, including on investments abroad; and (iii) concurrent reforms in capital markets. Given the limited scale of the planned reform, the key challenge for India is to achieve sufficient critical mass early on. Options to address this challenge include granting permission for existing workers to switch to the new system or outsourcing all or part of the reserves of private sector provident funds to the new pension fund managers.

Series:

Working Paper No. 07/85

Subject:

English

Publication Date:

April 1, 2007

ISBN/ISSN:

9781451866490/1018-5941

Stock No:

WPIEA2007085

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

21

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