It is projected that pension funds will be next to only banks in terms of size over the next 10 years. Therefore, management of these funds is critical to the Indian financial system. This article looks at the management of these funds and how pension funds will effect various markets.
Pension
funds manage 36% of total financial assets. Pension
funds are also able to lend considerable stability to
the capital markets as long-term fund providers. They
also help uplift corporate governance. If you think
we are thinking of such country India, you are very
sadly mistaken. This is the scenario in the world's
largest economy, the USA that has the deepest capital
markets.
In
comparison, pension and provident fund management in
India makes an excuse for `poor management'. It represents
a total disregard for prudent investment management
and actuarial principles. Worse still, it is based on
the whims and fancies of the ministry of labor, which
itself has a blatant conflict of interest in India.
Pension
funds are very large funds. Effective management of
these funds is a very important goal not only for the
contributors, but also for the economy. This is because
they represent a large part of the collective household
savings. If these funds are not managed effectively,
it may lead to disasters of huge magnitudes. This can
slowdown GDP of the country as well as cause grave political
disturbances. |
