The Project OASIS (Old Age Social and Income Security) committee, commissioned by India’s Ministry of Social Justice and Empowerment in 1999, identified significant concerns about aging, health, and income security for the elderly in the country. Chaired by S. A. Dave, the committee projected that India’s population would rise by 49 percent between 1991 and 2016, with the elderly population (aged 60 and above) projected to increase by 107 percent to 113 million by 2016. By 2030, this number was likely to reach 179 million, accounting for 13.3 percent of the total population. The committee highlighted that increased life expectancy, with an expected lifespan of 77 years at age 60 by 2016, necessitated a robust pension system to ensure adequate old-age income security. Committee members included Anand Bordia (Joint Secretary, Ministry of Social Justice and Empowerment, Government of India); Dharmendra Deo (Joint Secretary, Ministry of Social Justice and Empowerment, Government of India); R. S. Kaushik (Central Provident Fund Commissioner, Ministry of Labour, Government of India); C. S. Rao (Joint Secretary (Insurance), Ministry of Finance, Government of India); A. P. Singh (Deputy Secretary, Ministry of Social Justice and Empowerment, Government of India); Atul Chaturvedi (Deputy Secretary, Ministry of Social Justice and Empowerment, Government of India); Ajay Shah (Associate Professor, IGIDR); Nalin Thakor (Chairman, Thakor & Associates); and Gautam Bhardwaj (Director, Invest India Economic Foundation and Member-Secretary).

The committee concluded that the existing pension provisions in India were insufficient. Government employees received noncontributory, indexed, defined-benefit pensions funded entirely by the state and contributed 12 percent of their wages into a provident-fund scheme. However, central-government pensions, covering 3.5 million employees, were financially burdensome, with projected expenditures rising from Rs. 71,079 million in 1996 to Rs. 1,996,757 million in 2046. In the organized sector, the committee noted, workers had to subscribe to the Employees’ Provident Fund and Employees’ Pension Scheme. Despite high contribution rates (between 23.61 and 25.61 percent of wages), poor returns and liberal withdrawal policies resulted in inadequate terminal accumulations, with the fund distributing average terminal accumulations of less than Rs. 50,000 per member during 1996/97. Furthermore, the committee found that the unorganized sector, representing 86 percent of the workforce, including farmers, shopkeepers, and casual laborers, lacked formal pension provisions. The Public Provident Fund, introduced in 1968, had low coverage and was often used for tax evasion rather than old-age income security, with coverage remaining below 1 percent of the working population even after decades of existence.

In response to these findings, the committee recommended establishing a new, inclusive pension system. This system should include excluded workers capable of saving modest amounts and converting these savings into substantial old-age income security. The committee emphasized that the system should be simple and convenient, capable of yielding large sums from modest contributions in a risk-free manner. It also recommended centralized recordkeeping and individual access facilitated by IT systems to ensure efficient management and accessibility, thereby lowering transaction costs. To enhance management of pension funds, the committee suggested introducing professional pension fund managers and implementing prudential regulations to ensure the safety and growth of the funds. It advocated allowing individual choice and control over assets, offering various styles of fund management to cater to different risk appetites.

The committee suggested balancing incentives for lump-sum withdrawals with annuity options to ensure long-term income security. It outlined a gradual implementation path for reforms to existing provisions and the introduction of new pension provisions for all citizens to ensure widespread coverage and benefit adequacy. While it acknowledged the challenges posed by initial setup costs and transition management, it stressed the importance of ensuring the sustainability of pension funds and the adequacy of returns. The proposed regulations aimed to create a flexible and inclusive pension system that would benefit a broader segment of the workforce, including those in the unorganized sector, ultimately making it easier to do business in India.

The OASIS committee’s recommendation to establish the National Pension System was accepted and implemented in 2004 for government employees and extended to all citizens in 2009. It included centralized recordkeeping managed by the National Securities Depository Limited and professional fund management regulated by the Pension Fund Regulatory and Development Authority. Some recommendations, such as removing voting rights on Treasury stock and instituting comprehensive tax-treatment reviews, were rejected. Partially accepted recommendations involved enhancing IT roles and reforming existing pension provisions. These changes aimed to create a more inclusive and efficient pension system, addressing old-age income security for a broader workforce segment.

The report addressed the growing challenges of old-age income security in India, highlighting gaps in existing pension systems, particularly for the unorganized workforce. It proposed creating an inclusive, professionally managed, and sustainable pension framework to ensure adequate and long-term income security for all citizens. Many recommendations were implemented, marking significant progress in expanding pension coverage and improving fund management.