Contrast this with a real rate of ten per cent - that is after discounting for inflation - in countries like Chile, and you know that you're getting a raw deal after retirement. Put it another way, if India's provident funds gave Chilean-style returns, whatever the average Indian pensioner gets on retirement would double.

And that, of course, applies only to around 34 million people, or around ten per cent of the country's working population, that are presently covered by various pension schemes. The others, when they are 60, are left high and dry, at the mercy of children and relatives who may or may not wish to take care of them.

A committee set up under the stewardship of former UTI chief S A Dave is currently engaged in recommending solutions to increase the returnsfrom India's pension funds, as well as to suggest ways to increase their coverage - by 2011, it is expected that India's above 60-year-old population will increase to 100 million, from today's 68 million. The Dave Committee has been appointed by the Ministry of Social Justice and Empowerment which looks after means to care for older people.

While Dave's report, to be submitted by February-end, will make suggestions to increase the coverage of the pension schemes and provident funds, its main concerns are linked with finding means to increase the returns from the provident funds.

Various studies commissioned by Dave suggest that the highest return on investment comes only if some proportion of funds are invested in the capital market. Most developed countries allow pension funds to invest at least 40 per cent of their corpus in the equity markets.

Aware that stock markets are very volatile and that large losses can be made here, Dave told press persons, that this was essentially a short-run phenomenon.In the long-term - provident funds usually invest with 30-year time-frames - returns on equity all over the world far outstrip returns on any other investments. In the period 1980-1996, for example, the annualised return on the BSE was 22 per cent - extend this to 1998, the period in which the market did very poorly, and you're still talking of around 19 per cent. Dave refused to comment on questions which related to the fact that India's stock markets are still not safe, and that cartels still get away with blatant rigging of the markets.

Interestingly, both LIC and UTI offer pension schemes, and they invest this corpus in the equity market as well. As against the nominal returns of around 12 per cent for the Rs 65,000 crore of provident funds administered by the Employees Provident Fund Organisation (EFPO), UTI and LIC gave a return of around 13 per cent - and that's in the period in which the stock markets have done badly.

Dave added that he was not suggesting that provident funds start investing inthe stock markets in a big way. He says that a modest beginning should be made, however, and this can then be increased over a period of time. In the US, for instance, government-run pension funds were allowed to invest just 6.5 per cent of their corpus in equity in 1964; this went up to 18.7 per cent a decade later, to 27 per cent in 1984, and 40 per cent in 1991.

So far, however, the EFPO which controls the bulk of all provident funds in the country has not been in favour of investing in equity, or even in private sector debentures which offer higher rates of return. A couple of years ago, following the recommendations of the Rakesh Mohan Committee on infrastructure, the government had decided to liberalise the rules for investments, and to allow provident funds to invest up to ten per cent of their incremental deposits in fixed deposits of triple-A rated private companies. The EPFO trustees, however, decided against this, preferring instead to invest in the totally secure government bonds andsecurities.