the productivity growth that is necessary for economic growth and improved standards of living in asia. public pension system5 perhaps the most significant impact of population ageing is on the pension system, in particular, and on the fiscal situation, in general. the choice of policies for stabilizing the fiscal situation is therefore important, especially if the governments decide to pursue a somewhat faster pace of consolidation to reduce its exposures to fiscal risks. while one option is to shift towards fully funded pension liabilities and more generally encouraging a diversified range of retirement income sources, another option is modifying public pension generosity and eligibility criteria by elongating the average numbers of years in the work force or service. in this regard, the pension reforms have taken the form of both structural and parametric changes. the reforms in many countries have focused on the more from unfunded to funded arrangements in order to address the issue of growing pension liabilities. this has led to creation of large sized pension funds necessitating appropriate institutional frameworks to ensure safety of invested funds. public pension systems exhibit considerable variety among the asian countries. only korea and taiwan have defined benefit, pay - as - you - go, public pension systems with largely universal coverage of the workforce. taiwan ’ s scheme ( which was expanded in 1983 ) results in a lump - sum benefit upon retirement, in contrast to korea ’ s more recently introduced scheme, which will result in a retirement annuity. coverage is relatively comprehensive for the mandatory provident funds of malaysia and singapore. these are defined contribution schemes which result largely in lump sum withdrawal benefits upon retirement, but which allow earlier withdrawals for specified purposes ( e. g., higher education for dependents, major medical expenses, housing ). the latter schemes are subject to government regulation or management ( in terms of governance provisions and investment policies ). the provisions of the systems suggest that the principal risks of inadequate savings ( due to unanticipated inflation, poor yield on savings, or longer - than - expected - life spans ) are almost wholly borne by the contributing populations ( heller, 1997 ). in the other asian countries, the government ’ s involvement in the pension sphere is presently much more limited, although some countries are considering or have recently implemented pension reforms that seek either to introduce new pension schemes or to strengthen the finances of existing schemes ( e. g., in indonesia ). public pension systems, if they exist at all beyond the civil service, are typically restricted to the larger enterprises in the formal

will be registered with the indian pension authority. the pension system relies on annuity providers who convert the lump sum of assets ( attained at retirement ) into a regular monthly pension ( or a variable annuity ) until death. the tax - free limit for accretions into the ira should continue to be a maximum of rs. 60, 000 per annum. premature withdrawals as well as the terminal accumulations withdrawn as a lump sum from provident funds should be taxable at the rate of long - term capital gains rate. however, the amount that is used for buying annuities should be tax - free. the income earned on funds held in trust by pfms and annuity providers, on behalf of contributors, should be exempt from any taxes. there is a strong case for integrating a micro - credit facility into the pension system whereby individuals can have access to funds in the form of a loan against their pension savings. the enduring message for asian countries, based on the experience of developed countries, is that dependency and its concomitant fiscal impact is not necessarily towards old age but also for the younger generation. while the expenditure on education can be funded by private provisions, that of health and medical care of older people are likely to come from public spending on social security. thus, ageing poses serious challenges on the fisc, which require immediate policy responses. in this regard, public pension reforms and health insurance would play a key role in alleviating the fiscal burden. v. policy response and lessons from developed countries population ageing has many serious developmental linkages with a potential to jeopardize economic and planning strategies. normally, the subject is viewed as a problem in the very long run ; therefore, policy initiatives receive only peripheral attention. however, while addressing the magnitude and timing of the adverse demographic fallout, there is a need to reflect on the likely direction and effects of critical policy choices in the social sectors, many of which initially have only a limited relationship with long run demographic pressures. these pressures later will eventually play an important role in determining longer - term fiscal effects. in reflecting on the options faced by the asian countries, it is useful to look at the debate in industrialized countries, where the focus has largely been on three broad sets of options. these are : measures for fiscal consolidation in the period before the full impact of ageing commences, thus improving the base level of national savings and public debt. actions to lower expenditures and raise primary budget surpluses in