New scheme with minimum assured returns will have high premium cost: PFRDA

New Pension scheme

The new scheme with minimum assured returns will soon be finalised but will have a high cost to ensure attractive returns, which will be borne by the pensioner in the form of a premium, PFRDA Chairman said.

“The new scheme with assured returns will have high costs. We have to ensure attractive returns. The cost will be charged to the fund. The pensioner would have to guarantee a high premium cost,” Pension Fund Regulatory and Development Authority Chairman Deepak Mohanty told reporters at a media briefing.

The scheme will be soon finalised but Mohanty did not put a timeline to it. The scheme will exist along with the new pension scheme. However, Mohanty said that the NPS is an excellent scheme as it has a low entry threshold of Rs 1,000.

Many states are opposing the new pension scheme and demanding to go back to the old pension scheme.

Mohanty said that all the states are signatories to the new pension scheme. There have been some delays by states in their NPS contributions but it's not a serious issue.

The total NPS and Atal Pension Yojana assets under management currently stand at Rs 9.4 lakh crore, which is 14 percent of GDP.

Some Organization for Economic Cooperation and Development (OECD) countries have significant assets in pension schemes totalling 80-90 percent of their GDP, he said.

As far as India’s APY scheme is concerned, India is aiming to add 1.34 crore new subscribers in this fiscal. The current enrollment in the scheme stands at 5.33 crore with Rs 28,800 crore AUM.

“There is a huge potential in APY with 49 crore Jan Dhan accounts out of which 29 crore are of age group 18-40 years which is the eligible age limit for APY. So we have a long way to go,” he said.

The APY has a guaranteed pension of Rs 5,000, which should be increased to Rs 10,000 and the age limit should be increased to 50 years, Mohanty said, adding, that the proposal is with the Finance Ministry.