'We should've competing pension products'

The insurance and pension laws are "joined at the hip", and the Centre's move to allow 100 per cent foreign direct investment in the insurance sector could also pave the way for global pension fund managers to enter the market without joint venture partners, Pension Fund Regulatory and Development Authority (PFRDA) Chairperson S Ramann said in a fireside chat with Vikas Dhoot.

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The regulator is also considering an idea to permit smaller pension fund houses, on the lines of small finance banks regulated by the Reserve Bank of India (RBI). Edited excerpts:

How do we scale up India's pension coverage?

■ The National Pension System (NPS) has delivered an average annual return of 9.2 per cent over 15 years, but participation remains skewed. About 75 per cent of total NPS assets are from government subscribers and 25 per cent from others. We perhaps need to reverse that. The goal should be to raise nongovernment NPS members from 10 million to 250-300 million in the next five to six years using various digital platforms. We need more funds as well, particularly to reach out to Tier-II and Tier-III cities.

We have large co-operatives, areas where there is greater wealth, micro, small, and medium enterprise clusters, and lots of workers. We never know where that demand comes from, and we need not just stick to the existing structure of a pension fund that requires ₹50 crore of capital. Can we not look at having a small pension fund, if I could take a leaf out of small finance banks? We need to leverage the fact that we've got the best payment system in the world. So why are we not able to bring in more people as distributors who are probably not regulated entities as we demand today? We just need to ensure we are testing for the data flow and ensuring there are no leaks anywhere.

Even before the Association of Mutual Funds in India launched the popular 'Mutual Funds Sahi Hai' campaign, PFRDA had launched the 'NPS Zaroori Hai' campaign. Is there something in the works to spread the pension message further?