NEW DELHI: Typically, the major responsibility for providing retirement income security has traditionally rested with the first two social partners — government and employers. This means that decisions about saving, investing and drawing down retirement savings were made by institutions on behalf of workers. Unfortunately, both of these sources of retirement income are undergoing considerable strain. As a result, most people seem to be saving up for their retirement on their own.
A recent study by Aegon Center for Longevity & Retirement, titled The New Social Contract: A Blueprint for Retirement in the 21st Century, shows that Indians have greater reliance on personal savings, compared to 14 other countries surveyed across Europe, the Americas, Asia and Australia.
They expect as much as 46 per cent of their retirement income to come from their private savings, with just 24 per cent coming from social security and 30 per cent from employer plans. In fact, more than half of the workers are ‘habitual savers’, who always make sure that they are saving for retirement, compared to 39 per cent globally. Also, about 26 per cent Indians save occasionally; 9 per cent are not saving now, but plan to do it in future. Just one per cent of working Indians has never saved for retirement and do not plan to do so.
Besides the working class, every second elderly person in India is equally concerned about his or her social and financial security. However, more than half of the respondents out of the total 10,000 surveyed agreed that the overall status of social security schemes for older persons is not satisfactory, according to another study conducted by Agewell Research and Advocacy Centre for the United Nations. Generally, India’s social security schemes cover initiatives for the elderly such as retirement pension, family pension, widow pension, old-age pension, health insurance and medical benefits, disability benefits and gratuity.
“While 58.7 per cent of the respondents disagreed with the fact that old-age pension schemes are working well in India, over 36.9 per cent respondents said that, in their opinion, disability benefit schemes, particularly for the elderly, are not satisfactory in India. Around 61 per cent of the respondents said that they are not satisfied with old-age financial security schemes in the country,” the findings suggest.
With a majority of the elderly being partially or totally dependent on others for their economic needs, the working member in the family rather has no option but to end up being a habitual saver.