'NPS Explores SWP Option For Lump Sum Withdrawals At Retirement'

The New Pension System (NPS) has been clocking increased number of subscribers and a solid returns figure even as the debate on NPS versus the Old Pension Scheme (OPS) rages on. Pension Fund Regulatory and Development Authority’s (PFRDA) chairman Deepak Mohanty spoke to Outlook Money about why NPS remains relevant because of its flexibility and high returns, amid the changing demographics in the country. The need of the hour, however, is pension literacy through focused initiatives

- Nidhi Sinha

What is your view on the Indian pension landscape? What is its future?

The pension coverage in India is quite low, partly because more than 90 per cent of the workforce is in the informal and unorganized sector, where people are not entitled to workplace-related pension.

There are different players in the market who are providing pension, such as annuity from insurance companies and some retirement solutions from mutual funds. Now, we have NPS and Atal Pension Yojana (APY), too.

Because of these two-NPS and APY-pension is now accessible to even people in the unorganized sector, and anybody can afford to have a pension.

This is being primarily driven by APY, which has about 46.3 million subscribers; there are 13.2 million subscribers in NPS. But there is more potential, so the aspiration is to ensure that everybody gets a pension.

Do you think NPS has a large role to play in providing pension to the unorganized sector?

Absolutely. NPS has a flexible design and it's a good scheme. Earlier, only those in government services had access to pension. Though NPS was also meant for only the government sector initially, it was extended to individuals later and then to the corporates. Now, anybody can be a part of NPS and can access similar schemes, depending on the risk tolerance. So, yes, NPS has a much larger role to play.

You have recently taken over as PFRDA chairman. Are there any changes that we'll see during your tenure in the NPS?

I would say it's a continuity, but there are a whole lot of things that need to be done. We will have a sharper focus on certain aspects.

There will be higher emphasis on pension literacy through focused initiatives and by roping in multiple stakeholders.