'We Want That Even Before You Buy A Mutual Fund, You Should Be In NPS'

Pension Fund Regulatory and Development Authority (PFRDA) chairperson S. Ramann, in an interview with Outlook Money Editor Nidhi Sinha as part of the Wealth Wizards series, talks about how the National Pension System (NPS) is moving from catering to the government sector to the non-government sector, why the regulator is focusing on larger distribution through new Multiple Scheme Framework (MSF) products, why it's important to have more choice in pension products and how NPS is turning into an end-to-end product.

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Recently, there have been a flurry of reforms in the National Pension System (NPS) space. One of the most significant ones is the introduction of the Multiple Scheme Framework (MSF), where pension fund managers have been allowed to float their own schemes. What is the purpose of launching MSF?

Prior to launching MSFs, we collected information from the ecosystem and reached out to different stakeholders to understand what was already there. MSF is more about implementing the existing thought processes into action. It's important to recognise that there are not enough intermediaries in India who are going to different subsections of the population and conveying the message (of the importance of investing for retirement) and bringing them into NPS.

NPS is not only for government employees. Probably, that was the thinking earlier. We are now moving from the government to the non-government segment and addressing the needs of a larger working population, maybe around 500-600 million people. That is what this bold reform is about.

MSF has the single goal of bringing the maximum people from the non-government sector into NPS.

NPS already had Tier I and Tier II accounts (now known as common schemes) but awareness about NPS is still low. In fact, the NPS uptake by corporates is not much. Will the introduction of multiple schemes under MSF create confusion among takers?

There are two parts to this. One, until now, we did not have a dedicated motivated sales force from the point of view of geographical reach, and even for the social sub-segments and the large informal strata of society within urban cities.