After 30 years of existence, the PPF has managed to attract only 1 percent of the working population. Further, the fund has not managed to accumulate a large volume of assets because of premature withdrawals, which are partially permitted after five years. Also, the duration of the scheme is 15 years, which may not be adequate for generating substantial accumulations for younger workers. Prima facie, it would seem that there is considerable scope for this market in India, and it can be developed not only by mobilizing the savings of those who are currently not covered by any pension scheme, but also by efficiently managing existing schemes. What is required is an effective way to convert modest savings into an old age income security provision.
Pension funds play a significant role in infrastructure financing in other countries.
While suggesting reforms for the pension fund market in India, it should be stressed that the primary goal of these reforms should be to provide adequate security to contributors in their old age, rather than promoting the growth of a particular sector, or raising resources for the state. Other objectives such as financing infrastructure should be pursued only if they help to achieve the primary goal. Sound pension planning can be achieved by obtaining continuous, uninterrupted accumulations, and by using sound fund management to achieve the highest possible rates of returns. As far as the latter is concerned, the Committee has suggested a voluntary scheme based on individuals' retirement accounts. Minimum contributions into this account would be free to decide the frequency of accretions into their accounts rather than making a fixed monthly contribution.