Pension reforms in India are slow and cautious, but are in the right direction.

The pension crises seem to have engulfed the entire globe. In US the public pension debt is over 100% of its GDP. While in Italy and Japan pension debt is amounting to twice their official debts. India too is not far behind in its pension debt. The pension liability of the central government for the year 2003-04 was Rs. 23,158 cr and is expected to be around Rs. 27,000 cr for the year 2004-05, which is equal to 1.7% of the GDP. These figures exclude the pension liabilities of the railways and the state governments.

Adding to this problem is that the number of people aged 60 and above has been increasing. According to the 2001 census, persons aged 60 and above were 76 million, while the number was 55 million during the 1991 census and according to the UN that figure is expected to climb to 142 million by 2021. This will mean putting more burden on the exchequer; with the center and state governments already running in deficits this could make both of them bankrupt. Mukul Asher, Professor, LKY School of Public Policy, National University of Singapore says, "There is an urgent need to ensure that all components of Indian pension system (Employees provident fund organization, Civil Service pension and provident funds at the center and in the states; occupational pension plans; and pension plans of public sector financial institutions) are professionally managed and are consistent with efficient market- based allocation of funds and labor market flexibility."

Recognizing the gravity of the problem the Indian Government has come up with pension reforms with the introduction of a new pension plan.