The country’s pension regulator is considering rolling out a scheme with minimum assured returns under the National Pension System (NPS) and a finance ministry-appointed panel is looking at how to make the new pension system better for its employees.
What Happened? The overall coverage of the NPS is much below its potential, especially in the corporate sector, Pension Fund Regulatory and Development Authority (PFRDA) Chairman Deepak Mohanty said in an interview with money control.
Here are the main takeaways from the interview:
- The focus is on the private sector: corporate entities and individuals. The regulator sims to add 13 lakh new subscribers this year. For the Atal Pension Yojana (APY), it plans to scale up new subscribers to 1.3 crore. It will also look to expand NPS reach through regional rural banks.
- Besides improving general pension literacy, the regulatory body aims to connect with corporates and their human resources teams to promote NPS as a more flexible alternative to the Employees’ Provident Fund.
- A scheme with minimum assured funds is in the works but there is no fixed timeline for its launch. The chairman said that such a scheme would inevitably raise costs.
- The regulator has decided to allow NPS subscribers to withdraw tax-free up to 60% of their total corpus at vesting, while the balance will be compulsorily converted into annuities.
- A committee has been set up to see how NPS can be further improved for government employees at a time when many states are opting instead for the Old Pension Scheme.
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