The Pension Fund Regulatory and Development Authority (PFRDA) has proposed that all superannuation and provident funds be brought under the ambit of the National Pension Scheme by making these portable.
The National Pension System (NPS) claims to have more than 17.1 million subscribers and total assets under management (AUM) of more than Rs2,04,000 crore, and PFRDA hopes to expand this manifold by bringing all pension funds under its ambit.
PFRDA has now organised a conference on portability from superannuation and recognised provident funds to National Pension System (NPS). The conference, being organised in coordination with Willis Towers Watson in national capital, aims at providing a knowledge base platform to corporates by providing solutions to address the issues / challenges of portability of superannuation funds to NPS, a FRDA release stated.
PFRDA expects 160 participants comprising corporate, points of presence (POPs), pension funds and central record keeping agencies (CRAs) to attend the conference.
Considering the fact that there are more employees in the private corporate sector than in the government sector, there is a great potential for NPS in the corporate sector, B S Bhandari, whole time member (economics), PFRDA said.
PFRDA has been constantly engaging with its stake holders in the NPS and has been working with industry associations for promotion of NPS in the private corporate sector, he said, adding that in order to make NPS entry easy and the interface user friendly, various modifications have been carried out in the product.
Rohit Jain, head, Willis Towers Watson (India), said the average life expectancy of persons in India has risen and hence there is a greater need for a retirement / pension product for all. Traditional pension products cover only 30 per cent of the population and there is a latent demand for product like NPS as there is no universal pension product in the country.
PFRDA chairman Hemant Contractor in his key note address said that with the opening up of economy people started getting more job opportunities and are switching jobs suitable to their skills and talents. Job switching has become more frequent and people seek more controls on their finances. It is when they start moving jobs and place from one to another, the concept of portability of their savings comes in.
NPS seeks to replace `Defined Benefit Pension’ schemes, which, Contractor said have become unsustainable not only for the government sector but also for the private sector, with a `Defined Contribution’ scheme.
The NPS, which was launched in 2004 initially for central government employees, was later extended to state government employees and later to the private sector. This scheme is now the National Pension System (NPS), which is regulated by PFRDA.
While addressing subscribers’ concerns over portability, NPS claims to give subscribers freedom of choice, lower cost, attractive returns, transparency and flexibility. NPS also offers innovations in products and processes – some recent examples being introduction of two new life cycle funds, inclusion of alternative assets in investment portfolio, online entry and exit etc.
The entry age to NPS is now proposed to be increased to 65 years from 60 years and there is an option to continue up to age of 70 years.