Non-annuity payout options possible under NPS

Hemant G Contractor, Chairman, Pension Fund Regulatory and Development Authority (PFRDA), talks to Prashant Kapoor about how recent changes have made NPS more attractive and where the future acceleration will come from.

- Prashant Kapoor

Have the additional tax benefits and seamless on-boarding process through eNPS been the tipping points for the progression of NPS?

The additional tax benefits that the government gave through Section 80CCD (1B) helped, as a lot of people who were sitting on the fence actually did decide to come to the NPS. The launch of eNPS made it very convenient for the people to join if they had Aadhaar or PAN card. The on-boarding through the eNPS is now just a five-minute process. This has greatly helped the progression of NPS which is reflecting in the numbers as well: more than 35,000 NPS accounts have got opened in the last three months alone. We have seen that it normally peaks around the financial year end when many people start investing for tax purposes. I suppose the trend will continue this year as well.

But, on analysing the AUM data, the per subscriber asset broadly is still less than `1 lakh.

We have now over 1.22 crore subscribers, out of which more than half, i.e. 65 lakh subscribers, are from the Swavalamban scheme and the Atal Pension Yojna (APY). There are around 38-40 lakh subscribers under Swavalamban scheme and around 27 lakh under APY, and both these schemes are low value schemes for the underprivileged with a small contribution of just `42 a month. Therefore, although the corpus is building up, it’s not very high and while the number of NPS subscribers has gone up rapidly over the years, the corpus would take time to build up.

The progression of NPS is reflecting in the numbers as well, as more than 35,000 NPS accounts have been opened in last three months.mind. The irony is that if they don’t start young, it will be difficult to build a good corpus over time.