Professional Documents
Culture Documents
Pension Markets and Products in India
Pension Markets and Products in India
PRODUCTS IN INDIA
PRODUCTS
What is the right product?
Flexibility in time and
amount of deposit
5
Low tax benefit 4 Account in your own name
3
Paid to nominee if you die 2 Portability of the account
or after retirement
1
• Accumulation Phase:
- Four investment choices (conservative/moderate/balanced/lifecycle)
- Default option – conservative
• Future NPS growth needs to focus on capturing real increases in earnings and
time series data needs to be created for this purpose
SEGMENTING THE MARKET
• Farmers = 5.8 million
• Small Retailers = 5.3 million
• Street Vendors = 0.7 million
• Self-employed = 3 million
• Small/medium manufacturers = 0.3 million
• Skilled/semi-skilled wage earners = 2.5 million
• Salaried employees in small firms = 1.5 million
• Others = 0.7 million
• Over 50% of these have incomes of less than Rs. 100K a year.
ENTERING THE MARKET:
Cross Selling
• 19% have neither a bank or Post Office savings accounts
• 8% bank exclusively with the Post Office
• 56% bank exclusively with banks (one in eleven of whom have
accounts with more than one bank)
• 17% have both Post Office and bank savings accounts and
• 44% are customers of life insurance institutions
• Conclusions
- banks and life insurers are positioned be the key players in
cross selling
- nearly 20% of the prime audience is outside the ambit of
cross selling opportunities
ENTERING THE MARKET:
Public Confidence
INSTITUTION Percent That Actively Mistrust the
Institution
India Post 0-2%
Nationalised Banks 0-2%
Regional Banks 7-30%
Cooperative Bans 14-32%
Private Banks 45-57%
Chit Funds 26-53%
LIC 1-9%
Private Insurers 35-58%
Mutual Funds 10-35%
Employers 31-38%
ENTERING THE MARKET
The Role of Commissioned Agents
• Sales efforts based on agent sales forces are problematic
for the NPS that must operate on small margins to
promote participation by lower income groups