By 
N. Avinashilingam, Chartered Accountant, Coimbatore

The Government
may  announce a National Pension
Fund.  This Fund may be administered
like  Public Provident Fund.  Individuals may be allowed to contribute a
maximum amount of Rs. 6 lacs per financial year to the Fund. The contribution
may  be allowed 100% deduction  from taxable income. Interest may be
credited at  8% p.a.. After the person
attains 60 years or at any age later than 60 years opted by the person,  monthly pension may  be paid. The pension amount may be
calculated at  8% p.a. of the corpus
fund standing at his credit. The corpus fund may be repaid to the nominee after
his death. 

All
contributions to the fund upto Rs.6 lacs per financial year may  be allowed as deduction from taxable income
for the year. All interest credited to the account until the person chooses to
draw pension may  be exempted from
income tax. The corpus fund repaid to nominee may  be exempted from income tax. Once the person opts to receive the
pension, the pension amount may be taxable. Where the pension amount exceeds
Rs. 3 lacs per year, income tax may be deducted at 10% of the pension amount.

In western
countries, social security scheme is there to take care of Senior Citizens. As
there is no such social security scheme in India, individuals may  be allowed to create a pension fund with tax
break while they are earning. 

Government will
be able to mobilise sizable resources from such a fund due to tax break
available. All individuals who save through this fund will be able to receive
regular pension from Central Government to take  care of their expenditure after retirement.