"NPS IS NOTA FAULTY SCHEME"

Deepak Mohanty, Chairman of the Pension Fund Regulatory and Development Authority, talks about pensions and more

- NAVNEET DUBEY

ONE OF THE of strengths of the National Pension System (NPS) is its low cost. But that hasn’t helped it become as popular as it was expected to be. In an exclusive interview, Deepak Mohanty, Chairman of the Pension Fund Regulatory and Development Authority (PFRDA), tells Business Today that sooner or later the NPS will take off because it is a good product. He speaks about why the NPS has not gained traction so far, and the efforts the PFRDA is putting in to make it successful. Edited excerpts:

Let’s begin with the Atal Pension Yojana (APY). It has around 46.8 million subscribers, while the NPS has about 13 million. According to you, why is the APY more popular than the NPS?

You are right, APY drives the numbers. But APY is for the lower income and deprived sections of society. And so there has been a great push, like in any other social security scheme. The APY is a government scheme where the government guarantees [the returns]. It is a defined contribution and defined benefit plan. One gets a pension, followed by the spouse, who gets a full pension, and then the accumulated corpus with interest comes back to you. And if you see, the return on the APY corpus is almost 9 per cent since inception. So it is not only a pension scheme but also a good savings scheme from a medium- to longterm perspective. And given that it is a kind of social security scheme and a small ticket scheme, the pension starts from ₹1,000-5,000. So it is affordable.