Government Pension can be defined as a regular payment made by the government to people above a specified age, to widows, or to disabled persons. In almost all the countries, the Government pension funds are set up by the respective government itself and controlled by its own government law, like the pension fund act. The main objectives of the Government pension funds are guarantee benefits to the members upon retirement, to create a consciousness for savings; as well as to provide other welfare benefits to the members upon retirement. In some countries, there are both government pension funds and private pension fund, and is difficult to distinguish each of them.
Government pension funds play a major role in the emergence of global economy. In developed countries, the number of retired persons is a big concern and the social responsibility of each government towards these set of people are a big apprehension. Unless and until, this problem is well taken care of, the economic growth of the country will suffer to some extent. Hence almost all governments are very keen on safeguarding the interests of the retired people, by creating its own government pension funds. The countries such as Japan ($1370 billion), Norway ($ 450 billion), and Netherlands ($313 billion) have the largest government pension funds in the world. Since these are long term funds in the hands of governments, it encourages to be reinvested to get higher returns, more often cross-border investments, and this will create a strong and stable economic growth of the country. These countries are dominant investors both in domestic as well as global markets with billions of dollars in assets. Hence pension funds are always continue to be on the government and corporate plan across the world. Research has shown that, the government pension funds grow by $1 trillion annually on an average scale.
Both G8 and OPEC countries, channel its government pension funds, more often the long-term liquidity funds, to western financial markets and other emerging markets in the world. These in turn contribute for the development of a highly integrated and efficient global financial market. The economic strength of developed countries is proportional to the relative size of its pension funds. In Muslim dominated countries the governments are offering Sharia-compliant government pension funds to Muslims, wherein the pension funds will not be invested in companies which are deemed sinful under Islam.
According to “Indian Pension Fund Market Forecast to 2013” research report, India is one of the budding prospects for investors looking for pension businesses, because of its savings pattern, increasing life expectancy, and the latest government pension funds reforms. Most of Indians look forward to have at least the current living standards after retirements too.