Only a fifth of retirees can support themselves

85% of them are government employees.

Just around 19 per cent of those about to retire in the next decade, or those in the age group of 51-60 years, are covered by some formal retirement scheme. Less than 2 per cent of those not covered by pension schemes will be able to support themselves at even vastly reduced levels of expenditure after their retirement.

This chilling possibility facing India's first generation of retirees that were born after Independence emerges from an all-India survey done for the ministry of finance by AC Nielsen ORG MARG.

According to the survey, while the country has around 45 million earners in the 51-60 age group, just around 8.3 million of them are covered by either government pensions or by the Employees Provident Fund (EPF) or similar pension structures.

Based on the current expenditure patterns of the balance 36 million workers in the 51-60 age group who have no formal pension cover, it has been found that just 2 per cent have savings that, if converted into annuities, are sufficient to pay for their post-retirement lifestyle assuming they are able to reduce expenditure levels to half of what they spend today -- that is, if a worker in this age group spends Rs 100 per month right now, his savings are enough to just provide an income of Rs 50 per month for the rest of his life.

If they reduce their post-retirement expenses to a third, there is no change in this percentage, but at a fourth the number doubles -- that is, around 4 per cent will be able to look after themselves based on the earnings from their present savings.

If, by living with their children, tomorrow's retirees are able to cut their expenses to a mere tenth of what they spend today, about 88 per cent will still not be able to maintain themselves.

Among those in the 51-60 age group who said they were covered by pension schemes in the survey, around 85 per cent were government employees, either at the Centre or in the states.

By virtue of this, all of them would be able to support themselves with post-retirement expenses equal to half their current expenditures.

Of the balance 15 per cent who are in the age-group 51-60 and have a formal pension cover like the EPF, just 2 per cent can support themselves at expenditures equal to half what they spend at the moment, the survey shows.