‘NPS is an attractive product because of its low cost’

livemint.com:

Mint that the SWP option is slated to be rolled out in October. Edited excerpts from the interview: What is the checklist that you have for your tenure? The larger focus will be on the NPS sector but since the adoption of pension scheme in the non-government sector is quite low, we want to focus on an all-citizen model. Globally, one of the critical issues faced by elderly people is poverty due to the lack of a sustainable source of income in their old age.

Despite the fact that people in advanced countries have access to multiple pensions—state, occupational and private pension—this is still not enough to meet their needs. The challenge in India is bigger because about 90% of the workforce is in the informal sector and do not have access to any kind of statutory old age retirement benefit and are left to fend for themselves. They need a pension and so, the sector needs to grow.

Currently, there are 65 million pension accounts of NPS and Atal Pension Yojana (APY) combined, but the numbers are actually coming from APY: about 52 million accounts. Of the remaining 13 million NPS accounts , 8.5 million are in the government sector, where the pension scheme is on autopilot and so employees necessarily have to come into NPS. Hence, the focus would be on the non-government sector and it will have two components— one is the corporate sector and the other is the all-citizen model which allows any common person to enrol for the pension scheme.

One common belief here is that if the head of the family has a pension account, that would suffice for everyone. Even those who can afford one don’t open a pension account for their spouse. But that’s not correct.