To help workers in the vast unorganised sector have a safety net at affordable prices, the government may bear the account maintenance charges of the proposed low-cost pension scheme.
“The government is likely to bear the charge after PFRDA reaches an agreement with depository NSDL on the low-cost pension model,” an official with the Pension Fund Regulatory and Development Authority told PTI.
Under the present structure, a subscriber has to pay at least Rs 470 as initial charges in the first year and Rs 350 annually to the National Securities Depository (NSDL) for maintenance of account.
“We are holding discussion with NSDL to bring the cost down and we would reach an agreement in two weeks time. Technical matters have already been sorted out,” the official said.
NSDL has agreed to bring its account maintenance cost down but the regulator wants it to be lowered further, the official added.
PFRDA has been asking the government to bear the cost of maintaining accounts of policy holders under the New Pension System after it was thrown open to all citizens from May 1 this year. However, the proposal is still lying with the government and was not announced even in the Budget.
The unorganised sector employs about 86 per cent of the country’s total workers.
Both the low cost and the present model would run separately. The subscribers will have to make their choices.
“Some facilities in the present model might not be there in the low cost model. The functionality would be less in the cheaper model,” the official added.
Under the present structure, a person has to deposit minimum Rs 6,000 each year into his account.
“In the low cost model the Rs 6,000 cap would be there otherwise there would be no relevance of a pension system as the amount accrued will be less,” the official added.
Initially, the government launched the NPS for central government employees joining service from January 1, 2004, and later it was extended to all citizens from May 1 this year.
Parliament is yet to pass the PFRDA Bill. But it is expected to sail through in the Winter Session of Parliament.
There are six fund managers for all the citizens’ scheme - IDFC Mutual Fund, Kotak Mahindra, SBI, UTI Asset Management, ICICI Prudential Life Insurance and Reliance MF-to manage the corpus of customers.
Besides, there are 21 PoPs of NPS, which include, State Bank of India, ICICI Bank, IDBI Bank, Oriental Bank of Commerce, Axis Bank and Union Bank of India.
PoPs are contact and collection points for customers wanting to be part of the NPS.