Economy

‘Mindset to blame for poor response to NPS’

The PFRDA, that is currently in the process of conducting pension awareness campaigns across the country, has a mandate to add five lakh new NPS subscribers and 75 lakh Atal Pension Yojana (APY) subscribers by March 2020.

The PFRDA, that is currently in the process of conducting pension awareness campaigns across the country, has a mandate to add five lakh new NPS subscribers and 75 lakh Atal Pension Yojana (APY) subscribers by March 2020.   | Photo Credit: V_V_Krishnan

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Only 10 lakh employees covered, people’s view needs to change, says PFRDA

It’s not the money people must put into it, but a certain mindset of individuals and corporates that makes National Pension System (NPS) a less-preferred saving option, according to the Pension Fund Regulatory and Development Authority (PFRDA).

For instance, some 7,000 corporates in the country are currently registered with PFRDA, but only 10 lakh of employees are covered under NPS.

Supratim Bandopadhyay, whole-time member, PFRDA, said, “We have dozens of individual corporates employ multiple lakhs of employees in our country. However, only 2-4% of employees of these 7,000 registered companies are covered under NPS. This is too low a coverage and has to improve. We see people’s mindset as the major impediment.”

The PFRDA, that is currently in the process of conducting pension awareness campaigns across the country, has a mandate to add five lakh new NPS subscribers and 75 lakh Atal Pension Yojana (APY) subscribers by March 2020.

NPS currently has a total subscriber base of 3.25 crore, (with ₹4 lakh crore under investment as on December 31) which includes Central and State Government employees (66 lakh), employees of Central and State autonomous bodies, corporates, NRIs (6,000) and individuals. APY now has a base of 2 crore subscribers, mostly people from the unorganised sector including labourers, farmers, construction workers, and daily-wage workers.

According to Mr. Bandopadhyay, the pension segment is yet to see quantum growth in the country and NPS currently covers only a tiny number of individuals and corporates, while a large population of small, medium, and micro enterprises and thousands of start-ups are yet to be part of the pension market.

The PFRDA is currently in the process of creating a strategy to approach each of these companies directly through HRs or through public campaigns.

“Most of us don’t think of retirement and old age. But the reality is our income will stop one day. As per studies, on an average, Indians live 17 to 18 years after retirement. But sadly, most of us decide to save only we are in the 45-50 age bracket. This mindset has to change and we have to learn to save before we spend,” he said.

NPS would soon be extended to OCIs (overseas citizenship of India) and to facilitate this PFRDA’s record keeping department was building an online system as per directives from RBI and the Ministry of External Affairs, he further said.

To make NPS more attractive, the central government is considering to double tax benefits to ₹1 lakh, from ₹50,000, under Section 80CCD (1b) and to make the annuity income tax-free. Also, the finance ministry may soon allow PFRDA to become a single regulator for all pension products, to give the entity more validity and standing in the country’s under tapped pension market.

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Printable version | Jan 28, 2020 11:48:54 AM | https://www.thehindu.com/business/Economy/mindset-to-blame-for-poor-response-to-nps/article30506496.ece

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