Govt plans enhancing NPS with additional features

EVENAS THE Unified Pension Scheme (UPS), which offers assured pension, has failed to gain much traction among government employees, the government is considering bolstering the market-linked National Pension System (NPS) with additional flexibility and options for the subscribers.

- PRASANTA SAHU

The newoptions to be available to the NPS subscribers include wealth maximisation, assured benefits with inflation protection, and predictable retirement income through innovative mechanisms such as pension credits.

The current NPS is a transparent, mark-to-market defined contribution pension scheme that emphasises fiscal prudence and is largely focused on the accumulation phase. Thereafter, it mandates atleast 40% annuitisation and a maximum 60% lump sum tax-free payout at the time of retirement at the age of 60.

However, it leaves certain key questions unanswered, such as the adequacy of the corpus and predictability of retirement income due to factors like market volatility, contribution persistence and investment choices.