Indian employees may not necessarily be as conscious about the cost of their money if such a pension scheme were to be launched in the near future. After all, we are used to gross inefficiencies in our financial system that allows banks to enjoy large spreads of 4 to 5 per cent.

Many Indian index-tracking funds already have an expense ratio of as much as 2.5 per cent thanks to the inaction or reluctance of the market regulator to cap these charges. Furthermore, a few index funds have even managed to significantly under-perform the index when all they are supposed to do is simply buy and hold index stocks!

High expenses, costs and fees will turn into a contentious issue in India as well if the government proposes to mandate contributions. Moreover, in the absence of any social security, no democratic government can survive the damage if a contributory pension fund scheme, with compulsory employee contributions goes belly up due a flawed system of funnelling money into stock markets.