To a significant extent, the Government can purchase this insurance from insurance companies. The design of the pension system should also include a Self Regulatory organization (SRO) that 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 Premature withdrawals as well as the terminal accumulations withdrawn as a lump sum from Provident Funds should be taxable at the rate of long-term capital gains rate.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.