National Pension Scheme was launched on January 1, 2004 for providing retirement income to all Indian citizens.
The Pension Fund Regulatory and Development Authority of India (PFRDA) is expecting the number of National Pension Scheme (NPS) subscribers to hit 21 million by the end of this financial year.
In an interaction with Moneycontrol, Hemant Contractor, chairman, PFRDA, said that they currently have 20.5 million subscribers.
“We had a good response from corporate subscribers as well for NPS. The number of corporate subscribers has gone up to 4400 corporates and this year itself 935 corporates has signed,” said Contractor. He added that there is a higher demand for e-NPS, which is a digital version of the scheme.
NPS is a voluntary, defined-contribution retirement savings scheme designed to enable subscribers to make optimum decisions regarding their future through systematic savings during their working life.
Under the NPS, individual savings are pooled in to a pension fund, which is then invested by PFRDA regulated professional fund managers as per the approved investment guidelines into diversified portfolios comprising of government bonds, bills, corporate debentures and shares.
These contributions would grow and accumulate over the years, depending on the returns earned on the investment made.
There is a proposal to raise the equity exposure in NPS to 75 percent and PFRDA has floated a concept paper on this. Contractor said that this is still open for public comments and that it will finalise it once they are received.
At the time of normal exit from NPS, subscribers can use the accumulated pension wealth under the scheme to purchase a life annuity from a PFRDA- empanelled life insurance company, apart from withdrawing a part of the accumulated pension wealth as lump-sum, if they choose so.
Partial withdrawals are also allowed and PFRDA has simplified the process.
The NPS funds are managed by a set of pension fund managers. For selection of new pension fund managers, PFRDA had floated a tender last year and had also selected some.
However, the regulator was not able to announce the results back then because the new foreign direct investment (FDI) policy was yet to be announced.Contractor explained that they are waiting for a clarification on that. “Only after that will tenders be floated. We have waited for a long time and are hopeful that it happens in this fiscal,” he said.