Indians have been brought up to believe in the importance of financial security in old age. Kids grow up listening to parents and grandparents talking all the time about both social and financial security and a regular income post retirement. Seniors keep reiterating how they do not wish to be dependent on their children for financial support in their old age. Yet, an alarming 50 per cent of the respondents of a survey by Grant Thornton turned out to be unaware of important government pension schemes such as the Atal Pension Yojana!
While about 38 per cent had some knowledge about the scheme, only a measly 11.3 per cent were fully aware of the same. This is certainly worrying and highlights the need for spreading awareness by educating and communicating with the target audience. With the overall contribution being relatively low for most individuals, the report suggests that many people may not be saving enough for retirement.
While about 25 per cent of the respondents were not enrolled in the National Pension Scheme, only about 30 per cent were satisfied with the scheme (with 6.98 per cent being very satisfied and an encouraging 24.58 per cent being just satisfied). About 39 per cent were neutral and over three per cent were dissatisfied. These low satisfaction rates indicate a need for improving NPS offerings to align with the expectations of the participants.
Are the respondents satisfied with their pensions? Not really. A significant 75 per cent of respondents are deeply concerned about the security of their pension investments. An overwhelming 99 per cent of respondents believe that their gratuity amount is not enough to fulfil their retirement needs. As if that wasn’t enough, only 29 per cent appeared to be well-informed about their gratuity details before receiving the amount.
That isn’t all; an alarming 30.23 per cent of the respondents had absolutely no knowledge of how their pension is calculated, while 52.4 per cent had some knowledge and 17.28 per cent had good knowledge.
Only 46 per cent of respondents feel satisfied with their Employees’ Provident Fund (EPF), while 37 per cent are neutral and nine per cent are actually dissatisfied.
Clearly Indians seek more reliable and transparent retirement products.
Most of the respondents (79 per cent) belonged to the 25 to 54 age group, that is, they make up the working-age population that should be actively contributing to pension schemes and planning for retirement. Those below the age of 25 (21 per cent of the respondents) as well as the seniors make up the remaining group of surveyed people. What is interesting, or rather, concerning is the fact that the majority of the respondents (80 per cent) were men. The gender disparity is quite striking, which is another cause for worry.
India needs to focus on financial literacy and maintain more transparency when it comes to pension planning. People should be educated about how their pensions and gratuities are being calculated. Unless people understand the retirement products on offer, how will they even improve the habit of saving? Guaranteed income is what most people seek to lead a comfortable post-retirement life, finds the survey. Therefore, it is probably time for the government to think of reforms that will ensure this and satisfy the customers. For someone has rightly said, ‘Retirement is when one stops living at work and starts working at living’.