Open letter on NPS in Kerala

M G Warrier

August 14, 2012

The Editor

Mathrubhumi Daily


Dear Editor

Participatory Pension and Development

This refers to the article ‘Participatory Pension and Development’ (August 14). I am aware that your paper has reservations about publishing any view opposing New Pension Scheme. For that matter, another editor from Kerala while regretting his inability to use an article on the subject even mentioned, ‘you will understand our position’.

Still, may I request you to forward this letter to Dr Mary George so that she can continue her support of NPS from a better informed platform?


Yours Sincerely

M G Warrier

Dear Dr Mary George

Participatory Pension and Development

Read with interest your article on the captioned subject published in Mathrubhumi daily today (August 14, 2012) with great interest. For Mathrubhumi, this is continuation of a campaign, the earlier part of which appeared as an ‘innocent’ letter from one Shri K R Janardhanan Pillai, Kallada which appeared in Malabar edition of the paper on August 5, 2012. Shri Pillai had argued that Participatory Pension will be beneficial to the employees as this will be in addition to the existing pension scheme taking the pensionary benefits to 67% of the last drawn emoluments. Kindly go through what follows when time permits and respond so that I can correct myself while commenting on the subject in future.

‘If a truth is not allowed full freedom, freedom is not full’-Vaclav Howell (Editor’s quote, Mathrubhumi, August 14, 2012)

I had written an article ‘What ails New Pension Scheme?’ which has since been published at MoneyLife website ( You can access the article by Google search also. Last week ET Wealth had come out with a story promoting NPS in private sector. I had responded online and ET Wealth has printed an edited version of my response in the print edition this week.

I have a couple of observations on your article.

i) I couldn’t locate the Provident Fund Authority’s website referred to in the article.

ii) I am not clear about investment in ‘Government Shares’ as a safe option for investment. Do you mean Central Government or State Government and what are the shares you have in mind?

iii) In the chart given, against item 4 as percentage of item 1, there is substantial fall during 2010-11 and 2012-13. Can you please give reasons?

iv) Can you assume growth at say 8% p. a. and make further projections for the figures given in the chart, factoring in the savings on account of Participatory Pension Scheme or losses as being lamented by Hon’ble Chief Minister Oomen Chandy (a) for the next 5 years, (b) for future 25 years at say 5-yearly intervals?

These efforts may give some strange revelations.

You may also like to read ‘Facing The Future-Indian Pension Systems’ based on a study by ING and IIM Bangalore in the context of NPS. Unfortunately the study was commissioned a few years after the introduction of NPS. D Swarup’s Foreword will give some interesting information about the legal status and the manner in which the scheme is being pushed through.


Yours Sincerely

M G Warrier

Economic Times Wealth, August 13-19, 2012: Readers’ response:

NPS should be more credible and transparent

The story ‘The best pension plan’ was highly informative and helpful. Considering the innumerable pension plans in the country, it is good to see one that is relatively simple and not prone to mis-selling. However a few problems have continued to plague NPS since its launch. Both the introduction and implementation of the scheme have been faulty. The NPS was started for the new central government recruits (excluding defence employees) at the beginning of 2004 even before the supporting legislation was in place. The NPS was kept outside the purview of the Sixth Pay Commission, even as the fund managers were made to agree to ridiculously low charges of 0.0009% for handling the funds, against the prevailing 2% for mutual funds. There seems to be an inordinate hurry to push through the scheme rather than introduce a reasonably reliable and credible social security plan. As the story points out, this is a good scheme and the government must work towards making it simpler and more accessible to investors.

MG Warrier, Mumbai

Note: ET Wealth published the above based on my following online comments, a telephonic conversation in response to an article sent to them on the subject

ET Wealth August 6-13, 2012: Online comments under New Pension Scheme story:


08 Aug, 2012 09:39 AM

The introduction and implementation of NPS have been topsy-turvy. NPS was imposed on new central government recruits (excluding defence employees) from 1-1-2004 even before the supporting legislation was in place. NPS was kept outside the purview of VI Pay Commission. A study of pension schemes by ING and IIM, Bangalore was commissioned three years after the introduction of NPS. The fund managers were initially made to agree for ridiculously low charges for managing the funds (0.0009% against the prevailing 2% for mutual funds) Thus a hurry in pushing through the scheme rather than the intention to introduce a reasonably reliable and credible social security scheme is evident throughout.


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