Pension Funds Can Power India’s Infra Growth And Drive Development: CEA Nageswaran

New Delhi, Jun 30 (KNN) Pension savings can play a key role in financing infrastructure and supporting India’s journey toward becoming a developed nation, Chief Economic Adviser (CEA V Anantha Nageswaran said on Tuesday,  while cautioning against funds chasing returns at the cost of long-term liability matching.

Addressing an event organised by the Pension Fund Regulatory and Development Authority (PFRDA), Nageswaran said a deep and well-governed pension pool could support growth-oriented investments while ensuring liability-aware returns for subscribers, positioning pension capital as a natural fit for nation-building investments, PTI reported.

Lessons from Global Pension Stress

Nageswaran pointed to funding challenges faced by pension funds globally, particularly during periods of low interest rates that pushed investors toward riskier assets. 

He said, "The funding gap has long plagued Western pension funds and narrowed somewhat as interest rates moved away from the zero-flow environment. However, a subtle risk has emerged." 

Pension funds are increasingly shifting toward assets that are risky, illiquid, and sensitive to macroeconomic swings.

"Gold is the clearest example, and for a country like ours, it carries balance of payments consequences that a domestic liability fund should really tackle," the CEA noted.

Shrinking Investment Horizons a Concern

Nageswaran also flagged the growing dominance of short-term investors in financial markets, noting that even traditionally long-horizon investors had seen their investment timeframes shrink. He said pursuing higher returns at the cost of pension promises was a risk the system could not afford.

Dignity in Old Age as a Measure of Development

Nageswaran argued that a developed nation should be judged not only by its economic output but also by the financial security and dignity it affords its senior citizens. 

"Viksit Bharat is not just a number on a national income chart. A country can host high output and still leave its old people anxious. The truer measure of a developed society is whether security and dignity in old age are broadly shared.” the CEA said.

(KNN Bureau)