PFRDA targets 10 mn NPS subscribers for FY15 - The Smart Investor

PFRDA targets 10 mn NPS subscribers for FY15 - The Smart Investor

Revamp and re-focus NPS

 Introduced effective January 1, 2004 through an earlier Budget announcement and an executive order,
NPS(originally New Pension Scheme and now National Pension System) is now in its
teens. Beyond forcibly denying a well-established pension scheme for a section
of central government employees who joined service after December 31, 2013 and
employees of various state governments who joined service after adoption of the
NPS by respective states, the scheme has not enthused many outside the captive
clientele for whom it was made compulsory even before legislative measures were
initiated or the issue examined by the central pay commission.
It would be  embarrassing for PFRDA to reveal the share of
88 per cent employees who were not covered by regular pension schemes in 2013,
whose interest NPS was to pursue, in the present corpus of Rs56,000 crore(AUM).
One option to salvage the
credibility of NPS would be to restore the defined-benefit-based pension scheme
for all employees who would have been  eligible
for such pension but for the introduction of NPS and use National Pension
System as an instrument to cover wage-earners and self-employed people who are
not covered by existing regular social security schemes like pension, provident
fund etc. to ensure that the burden of providing old age care for such people
does not entirely become the burden of the government. The PFRDA target of
coverage pegged at 10 mn for FY15 should be ear-marked exclusively for this
category and the target should be progressively raised from year to year.
M G Warrier, Mumbai


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