CHENNAI: The Pension Fund Regulatory and Development Authority (PFRDA) targets to enrol nearly 30 crore unique subscribers under National Pension Scheme (NPS) and Atal Pension Yojana (APY) in the next four to five years.
Talking to media on Saturday, Sivasubramanian Ramann, PFRDA Chairman, said; “Currently, in APY, there are 10 crore customers and 2.2 crore in NPS. Our job is to encourage people working in the private sector to invest and build a corpus for their retirement. Our aim is to have nearly 30 crore unique subscribers over the four to five years.”
The PFRDA aims to encourage people from Tier 4 and rural areas to invest in NPS and APY so that it can create a habit of investment among them and build a corpus for future needs when they get old. For this, the PFRDA has launched schemes like NPS Vatsalya for children, NPS Sanchay, and its ambitious project, NPS Swasthya, will be formally launched within a couple of months.
Ramann further said, “The kind of asset allocation which government employees enjoy, the PFRDA wants other people, who are working in private sectors or gig workers, farmers, want to enjoy.”
The regulator is now conducting around 350–400 outreach programmes across the country, targeting groups including farmers, milk cooperatives, farmer-producer organisations and MSMEs. Ramann also said nearly 1.3-1.4 lakh central government employees out of the 22 lakhs have subscribed to Unified Pension Scheme (UPS).
“But the state governments are designing UPS only according to their rspective needs.”
Speaking about the NPS not getting traction since it was launched over 15 years ago, he said that there was no commission for NPS.
“In this country, the investment products, which have reasonable commission, are sold. As part of strategy for the growth of NPS product, we support low-cost commission and also a Rs 200 fee that a distributor can get for onboarding a customer. So we are also prioritizing digital sale of NPS products so that the distributor’s cost remains minimum and subscriber is benefitted ultimately.”
Under the NPS, people can withdraw 80% lumpsum and 20% will be received as annuity after the retirement. But the tax benefit will be available for 60% withdrawal.
Expressing this concern, he said that tax on an instrument should be a constraint for investment. In India, nearly 90% of the people don’t pay tax. Investment in an instrument should be viewed from the perspective of long-term return it generates.”
The PFRDA is currently handling an asset under management (AUM) of Rs 18 lakh crore. India’s retirement-income replacement rate is currently around 35–40%, compared with roughly 60% level globally, the PFRDA chairman said; “Roughly, the world says your replacement rate should be about 60%. So 60% of your last pay should roughly be the kind of money that you get when you are in retirement mode. In India, it’s in the region of about 35% to 40%,” Ramann said.
According to the PFRDA, NPS Vatsalya has nearly 4 lakh unique customers, Atal Pension Yojana is adding 1.4 crore customers every year and NPS Sanchay will pick up in the near future.