'Most Indians aging into poverty': Can AMFI’s 401(k) idea rescue middle class' retirement future?

Indians aren’t retiring — they’re aging into poverty. “Most Indians don’t retire,” warned Ashish Singhal, co-founder of CoinSwitch. “They just… stop working. And then hope kids will provide.”

That sobering truth is pushing India’s mutual fund lobby to propose a radical shift: a 401(k)-style retirement plan aimed at a nation hurtling toward an old age crisis.

By 2050, one in five Indians will be over 60. Yet most of the workforce lacks any formal pension, and public safety nets won’t come close to covering the gap. “That’s the reality for a country that’s getting older faster than it’s getting richer,” Singhal wrote in a viral LinkedIn post.

Enter the Mutual Fund Voluntary Retirement Account (MF-VRA) — a new proposal from the Association of Mutual Funds in India (AMFI) designed to kickstart private retirement savings. Modeled on the U.S. 401(k), the MF-VRA allows both employers and employees to contribute to a long-term, professionally managed fund. Freelancers and gig workers can opt in independently.

It’s portable across jobs, market-linked for growth, and designed to move with workers through a lifetime of employment — a direct challenge to India’s fragmented retirement system.

On taxes, AMFI is pushing for more than just existing 80C deductions. There’s a call for new exemptions above the ₹1.5 lakh cap to drive higher participation. “Contributions may qualify under Section 80C,” Singhal noted, “plus there’s a proposal for additional exemptions beyond 80C to make it more attractive.”

But the plan’s survival hinges on trust. Would workers actually shift their savings into market-linked products, especially in a country where gold and fixed deposits still dominate?

As Singhal put it bluntly: “But the big question is, will people trust it?”