Financial Market Implications of India's Pension Reform

23 Pages Posted: 17 Apr 2007

See all articles by Hélène Poirson

Hélène Poirson

International Monetary Fund (IMF) - Research Department

Date Written: April 2007

Abstract

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.

JEL Classification: G23, G28

Suggested Citation

Poirson Ward, Helene, Financial Market Implications of India's Pension Reform (April 2007). IMF Working Paper No. 07/85, Available at SSRN: https://ssrn.com/abstract=980814

Helene Poirson Ward (Contact Author)

International Monetary Fund (IMF) - Research Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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