The panel notes that India is not immune to the worldwide phenomenon ofageing populations. Life expectancy is rising and traditional supportsystems such as the joint family system are breaking down. If the country isnot to have a huge population of the aged destitute, some pension systemmust be worked out.

Currently, almost 90 per cent of India's workforce are not eligible toparticipate in any scheme providing security in their old age. At the sametime, the Government does not have the wherewithal to provide for the burdenof pensions. The panel has calculated that providing Rs 100 per monthpension to the projected 175 million elderly population in 2025 wouldtranslate into an annual outflow of Rs 21,000 crore for the country. So theonly way out is, as the report puts it, "to address the problem throughthrift and self-help." That is to make certain that accumulations arecontinuous and uninterrupted and also by using sound fund-management toachieve the highest possible rate of return. Even a small change in returnscan make a large difference to terminal accumulations.

Research by the report shows that regular savings of between Rs 3 to Rs 5per day through one's working life will suffice to enable the poor to liveabove the poverty line, provided the assets are invested wisely.

The committee has recommended a system of individual retirement accounts(IRA). An individual will be given a unique IRA number, and he will berequired to save Rs 500 per year. The individual accounts will be fullyportable-across jobs and locations. A network of points of presence (PoP)has been mooted, using bank branches and post offices. But the crux of therecommendations is that six pension fund-managers would be chosen byauction. A net worth criterion will determine eligibility for bidding. Arestructuring of the PPF and provident funds has also been mooted.

While the emphasis is on private savings, there is a provision for aninsurance cover for the principal amount, and a "relative returns guarantee"which would ensure that severe underperformance by a fund-manager ispenalised. The suggestions are a valiant attempt to come to grips with anintractable problem, and should be speedily implemented.