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‘InDIAs’: Innovative Retirement Security Bonds for India
By Arun Muralidhar
A commonly-accepted retirement goal for a healthy pension is for it to sustain the relatively higher standard-of-living of the latter part of one’s working life throughout retirement. A recent innovation implemented by Brazil in January 2023 might provide a solution to the pension challenges faced by India, and, more importantly, satisfy the key goals identified by the Reserve Bank of India in respect of debt management and a stable debt structure as also self- reliance and financial inclusion identified by the Government of India. We recommend India create and issue an innovative new bond: – Inflation-linked, Deferred-Income, Annuity-like Securities (InDIAs), known previously as SeLFIES. InDIAs is a single, simple, liquid, low-cost, relatively low-risk (government-issued) instrument that is easy to understand for even the most financially unsophisticated individual because it matches the desired real retirement income profile of individuals and embeds accumulation, decumulation, compounding, and inflation-adjustments. This paper also demonstrates how it achieves self-reliance (Aatmanirbhar) and leverages Jan Dhan accounts to improve financial inclusion via digitalization.
Source @SSRN
