Hemant Contractor on Technology's Role in Pension Industry | Digital Dialogues
Hemant Contractor, Chairman, Pension Fund Regulatory and Development Authority (PFRDA), talks on how Information Technology has been a key component in driving the growth in pension industry. Outlook Money Digital Dialogues, December 2015.
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Transcript
00:00 The pension sector in India and the role that technology has played in its evolution.
00:13 Now, if you look at the pension industry in India and the role that technology has played,
00:23 you can discern two or three drivers which actually propel the growth of the industry
00:29 of the pension industry.
00:31 And information technology was a very key component of these drivers.
00:38 Prior to say 2000, pension was something which was confined to very few people in this country.
00:48 You had the civil servants who enjoyed pensions.
00:52 They had a pensionable job, all of them.
00:55 And you had the defence, they also enjoyed this pension.
01:00 Then you had organised labour and industry, who enjoyed pension benefits through the EPFO.
01:08 So these were the, and there were a few other industries like the coal miners had their
01:13 own fund and then the tea industry had its own statutory schemes.
01:20 So barring this organised sector in this country, there was not much available by way of pensions
01:27 to the unorganised sector.
01:29 And this was becoming a major issue because the bulk of the workforce in the country is
01:34 in the unorganised sector.
01:36 In fact, almost 85-86% of the workforce is in the unorganised sector.
01:43 And for this unorganised sector, there was no proper pension scheme available.
01:48 So the government woke up to this realisation in the 90s.
01:54 In the 90s, they realised that something had to be done about this sector because till
02:02 then it had not been so much of a problem because of the traditional forms of support
02:07 that were available to people in their old age in India, the joint family system and
02:11 all that.
02:12 So these formed the traditional support systems for old people when they retired or when they
02:20 gave up working.
02:22 But slowly over a period of time, the joint family system started disappearing and old
02:28 people were largely left to fend for themselves.
02:31 So this problem started becoming acute in the 90s, 80s and 90s and then the government
02:37 then realised that something had to be done about people so that they could take care
02:41 of themselves in their old age.
02:43 So that's when they came up with this idea of having a pension system in this country
02:47 and we were, the PFRD and the National Pension System are in fact a result of this thinking
02:54 of the government.
02:55 [Music]