Pune: Reliance Capital Asset Management (RCAM), a part of Reliance Capital and amongst India’s largest Asset Managers, today unveiled its first ‘Retirement Survey’.
The survey has been conducted online pan India in collaboration with IMRB International, amongst India’s largest research agencies.
“India is a young country with the median age of it’s population under 30 years. We have around 100 million people today above the age of 60 years, which is expected to triple to 300 million by 2050. This will pose a huge economic challenge for the country, if we do not plan for providing right retirement options today. With this study, we have made an attempt to understand the mindset of the consumer towards retirement planning”, said Himanshu Vyapak, Deputy Chief Executive Officer, RCAM.
India’s per capita retirement and pension assets as a percentage of GDP are amongst the lowest in the world. It has 15.1% of retirement assets (as a percentage of GDP)as compared to 21% in Germany, 41% in Brazil,78.9% in USA and 146% in Australia*
The online survey reveals that Retirement planning is the most important financial goal for respondents, ahead of other goals including buying a house, education of children & marriage. The retirement planning goal is the most important for the 30-40 and 41-55 age groups.
The most important reasons for consumers to buy a retirement plan are “Enjoying retired life” and “taking care of family”. States like UP have expressed greater concern towards rising costs on account of inflation and would like their retirement returns to beat inflation.
Considering the strong family structure that exists in India, “my children will take care of me when I retire” has emerged as the main reason for not planning for their retirement. “I have enough savings” was the second key reason for not opting for any retirement plan.
‘Studies** have indicated that the joint family system has dropped from 35% to 31% in the last 5 years, Also, the number of people ( aged 41-55 years) living alone has increased from 31% to 34% since 2008. We are seeing a shift in the family structure which will have an impact on the retirement planning behaviour in the next 5 years’, said Mr Vyapak.
The survey reveals that majority of the respondents prefer to invest in retirement plans between the ages of 30-40 years.More than 60% of the respondents said they would like to start saving for retirement before 40 years.
The survey also points out that Male and Female consumers have different motivations to opt for a retirement plan. While “taking care of my family” was the prime reason for male respondents intending to buy retirement plans, “I don’t want to be dependent” was the top reason for females.
In Maharashtra, consumers believe retirement is the most important financial goal and the main reason for buying a retirement plan is to ensure they are not dependent after retirement. Maharashtrians also have expressed that retirement planning should ideally be done before the age of 40.
‘India today has approximately 15 lakh crore of retirement assets – including EPFO, exempted Provident Funds, superannuation & gratuity funds, NPS, PPF and Insurance – of which over 90% are currently invested in fixed income options. The government has been sensitive to expand this portfolio and allow these retirement funds to invest in equities in a calibrated manner. We see this as a strong move that will enable superior returns in the long term for investors”
Reliance Retirement Fund, the first CBDT approved equity focussed retirement fund offering benefit under Sec 80 C to investors, has raised over Rs 200 crore from over 40,000 investors in a span of last 3 months. Over 85 percent of the investors have opted for the SIP option and chosen the equity route to plan for their retirement.
‘We are seeing a steady acceleration towards investments in equity based retirement fund. Our total commitment from SIP’s in Reliance Retirement Fund is over Rs 1,300 crore till date. We believe that the overall contribution of such funds, which is miniscule today,will grow manifold in the coming years. Our plan is to enrol over one million customers for this option in the next three years’, said Mr Vyapak.
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