Himadri BuchMoneycontrol
With an aim to increase its customer base, PFRDA Chairman Hemant Contractor stands by his demand with the government to provide 'Triple E' benefits to the schemes under the National Pension System (NPS) to bring them at par with EPFO and PPF where the maturity amount is not taxed.
“We have been reiterating our earlier request of making the NPS Triple E. We would be repeating our request this year as well,” Contractor told Moneycontrol.
Under the 'Triple E' category investment, all three accrued interest and withdrawal are exempt from tax.
He said making the NPS 'Exempt, Exempt, Exempt' product would go a long way in increasing the customer base of PFRDA.
Contractor added that compared to other pension schemes, NPS is a bit disadvantageous as both EPFO and PPF enjoy the 'Triple E' benefit.
He further said that NPS records growth of 30-40 percent ever year and this financial year, too, he expects a similar kind of growth in NPS.
Currently, there are about 1.40 crore subscribers under NPS and its AUM has crossed Rs 1.45 trillion mark.
The National Pension System is a voluntary defined contribution pension system which is aimed at creating a pensioned society in the country.
PFRDA has also demanded the government for tax benefits under Tier 2 NPS accounts. “Tier 2 accounts do not enjoy any tax benefits. We have taken that up with the government. They should also be given the same kind of tax benefits as available to mutual funds. So if somebody saves for more than a year then they should get indexation benefit,” Contractor said.
The pension regulator is also in talks with the government for allowing state retirement funds to invest more in equities and opening them up to private-sector management to improve returns.
“We have been in talks with the government. Investments should not be allowed only in equities but should be given a wider choice in terms of the investment in which they can invest,” Contractor said.
He adds, “A wide range of choice is available for non-government organisation so it is our long-standing demand. About 2 or 3 meetings have been held with the government and it is now nearing conclusion. We are quite hopeful that government will allow.”
PFRDA has also invited bids for managing the funds of the private sector National Pension System (NPS) and decided to select 10 pension fund managers through the auction. Contractor said they are evaluating the bids and the final list of bidders will be known by November 30.
Currently, the NPS has eight pension fund managers, namely: HDFC Pension Management, ICICI Prudential Pension Fund Management, Kotak Mahindra Pension Fund Ltd, LIC Pension Fund, Reliance Capital Pension Fund, SBI Pension Funds, UTI Retirement Solutions and Birla Sun Life Pension Management.
He further said that PFRDA has also introduced two new Life Cycle Funds -- Aggressive Life Cycle Fund and Conservative Life Cycle Fund for private sector subscribers to provide a pre-programmed diversification of assets in various asset classes as per the age and risk profile of the subscriber.
On the Atal Pension Yojana, Contractor said they have already opened 38 lakh accounts so far and are hoping that it may go up to 50 lakh by March.
He maintained that the ongoing demonetisation move by the government will not have any impact on the pension fund industry.
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