The problems that arise as a result of the increase in the population of older generation is universal in nature. Unless there are effective, old-age income-related schemes in place, the dependence of the older generation on the younger is bound to rise. Governments world over are devising ways to tackle this crucial problem and India is not far behind.

One aspect that is universally being observed today is the increase in the component of old-age persons (or the elderly) among the total population. This is a consequence of the vast improvement in medical technology and disease intervention. This is in fact a very welcome sign as compared to the ones that existed not so long ago, when epidemics used to engulf sizeable chunks of the population. However, it is leading to some sort of demographic imbalance and the dependence of the older generation on the younger one is rapidly rising. This inter-generation dependence is bound to rise unless there are schemes in place to tackle this growing trend. A very effective way of doing this is to have appropriate pension schemes. However, pensions in India are either employment-driven or available for purchase by the pension-seeker through insurance companies in the market, which are beyond the reach of a large percentage of the population.

Pension accounts have always been associated with life insurance schemes. One main reason for this affinity is the actuarial involvement that is associated with the pension accounts as well. As the final price of a purchasable pension account or an annuity is dependent on the expected life term of the pensioner or an annuitant, the experience and knowledge of the actuary is very much drawn into the designing and pricing of a pension product. Besides, if life insurance takes care of the risk of a premature death, an annuity or a pension product takes care of the risk of excessive longevity. One might say this is the antithesis of life insurance and as such very closely associated with it. Further, the business of life insurance is replete with acceptance of risks and as such it follows as a natural sequel that the risk-assumption that is a part of the pension product can only be properly assessed and assumed by a life insurer

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