Expressing concern at the rising pension burden of the Centre and the states, the Reserve Bank of India on Tuesday stressed on low inflation, monetary and financial stability to make the pension reforms a success.
RBI Deputy Governor Rakesh Mohan said the central bank would coordinate with other financial sector regulators SEBI, IRDA and PFRDA to ensure financial stability.
"The most important role of RBI would be to ensure low and stable inflation along with monetary and financial stability to make pension funds feasible," he said addressing a pension conference.
Mohan said financial market has to be diversified enough to make investments of pension funds feasible.
Pointing to the mounting pension burden on government, Mohan pitched for pension reforms as the kind of returns that pensioners expect cannot be generated by the present system.
With rising urbanisation, income and growth in economy, he said there will be huge demand for pension.
Pension Fund Regulatory and Development Authority Chairman D Swarup said about 20 million people are waiting for opting for the new pension system. The figure will double to 40 million within 5-7 years.
"We will develop a world-class pension system, which will be fair to all sections -- subscribers, pension funds and intermediaries," he said.
He said the pension reforms was necessary as the pension bill of Centre and states have increased to Rs 65,000 crore (Rs 650 billion) in 2003-04. "It will more than double in 2009-10," he said.
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