Multinational companies were the first to plunge in but we are now seeing wider acceptance among Indian groups, technology companies and public sector units. The traditional notion of pensions was always understood as defined benefit plans or plans which pay an annuity. Employer based plans include superannuation and gratuity but they are not as pervasive as the provident fund scheme, India's largest pension plan. The private pension management industry in India is still nascent. Traditionally the key players have been the provident fund commissioner, LIC and in-house operations.
Today there are a number of players entering pension administration.
However, full-blown pension management is still waiting for the implementation of regulatory reforms. We hold the conservative view that while Indian stock markets may be ready for pension money, Indian pension money is not yet ready for stock markets. Currently the average salary growth rate in India is higher or almost equal to the possible earnings on funds. This reflects the fact that organisational compensation has begun moving with the market while pending pension reform has constricted investment performance and needs to change. We also believe that given the fact that there is no social security, pension money needs to be handled carefully from the start and that often entails professional management.