To expand pension coverage in the country, financial institutions and post office branches will be paid better for enrolling people in pension schemes, the finance ministry said on Friday.
The Pension Fund Regulatory and Development Authority (PFRDA) has increased the incentives payable to points of presence (POPs), the principal distributive points for the National Pension System (NPS), the ministry said in a statement.
The authorized branches of POPs act as collection points and extend a number of customer services to NPS subscribers, including requests for withdrawal. “A new incentive towards increasing persistency has been introduced under which POPs will receive an incentive of Rs50 per account per annum for every account which continues to contribute a minimum of Rs1,000 in a financial year,” according to the statement.
The fee for initial subscriber registration to a POP has been increased to Rs200 from the current Rs125, the statement said. Charges have also been increased in case of e-NPS (for subsequent contributions).
“PFRDA believes the renewed incentive will help in increasing the reach of pensions, through the efforts of POPs,” the statement added.
NPS is a voluntary contributory retirement savings scheme designed to enable systematic savings during a subscriber’s working life. It is an attempt towards finding a sustainable solution to providing adequate retirement income to every citizen of India. “Our pension penetration is very poor (about 14% of working population) because of the fact that the informal sector accounts for a large part of the labour market. The challenge is to reach out to the informal sector,” PFRDA chairman Hemant Contractor had said in an interview
According to the ministry, PFRDA has taken several initiatives in the past to increase pension coverage, notably introducing e-NPS, reducing minimum contribution levels, new investment instruments, and aggressive life cycle funds.
NPS, introduced in 2004 for government employees and opened to every citizen in 2009, now has a corpus of Rs2 trillion with a subscriber base of over 16 million people.
The subscriber base includes central and state government employees and members from private sector enterprises, including the informal sector.
The Atal Pension Yojana, a scheme launched in 2015 for the unorganized sector, is a part of the subscriber base with about 5.8 million beneficiaries accounting for a corpus of about Rs2,500 crore.