The New Pension Scheme (NPS) architecture has been
in place for the central government employees for over a year
now, since April 1, 2008 and the NPS corpus amounting
to over Rs. 2,100 cr, stands invested in it. According to the
Pension Fund Regulatory and Development Authority (PFRDA),
the three pension funds, namely LIC Pension Fund, UTI
Retirement Benefit Pension Fund and SBI Pension Fund which had
been designated to manage the government pension last year,
have generated returns varying from 12-16% on the NPS
corpus during the year 2007-08, weighted average return being
over 14.5% (as per the unaudited results). The states in the
country are at different stages of adopting the NPS. Twenty one
states have joined the scheme. After the bonanza of Sixth
Pay Commission, the Government has gone a step ahead to
launch the NPS for employees of the private sector, to the self
employed and has extended it to all citizens of the country. This is a
great initiative taken by the government to create a financial
safety net for crores of Indians who have been deprived of it so far.
In August 2008, the government advised PFRDA to extend
NPS, currently subscribed to by government employees, to all
citizens on a voluntary basis. Central government employees, who
joined service on or after January 1, 2004, are covered under NPS.
Most of the workforce in India is without any old-age security
cover. Only about 13% of the Indian workforce (425 million) has
some formal pension cover. Implicit pension debt of providing
pension security to less than 3% of the workforce is estimated at 65% of
GDP, and is growing at an average annual rate of over 20%. With
the increased lifespan, population over the age of 60 is growing at a
rate of 3.8% and is estimated to swell to 110.5 million by 2010 and
330 million by 2050. The NPS has emerged as the most viable solution
to India's problem of inadequate pension security net and to reduce
the fiscal burden due to pension liability. |
