The New Pension Scheme: Good intentions, poor execution

The Centre is trying to push the New Pension Scheme. However, out of the 23 States which had notified adoption of the Scheme for public sector employees, only 12 have executed the plan so far

In the current Budget, the Central government had announced that it would contribute Rs1,000 towards each New Pension Scheme (NPS) account opened this year. The Pension Fund Regulatory and Development Authority (PFRDA) plans to make the scheme more attractive. While various efforts have been made to make the NPS attractive, the Centre has failed to attract its own States towards the scheme.

Even after six years of its launch, only 12 States have executed the NPS scheme, eight have merely entered into an agreement with the NPS Trust. Administrative difficulties in identification of eligible employees and the difficulties of implementation of a payroll-linked programme are some of the difficulties that have been cited by various States for non-implementation of the scheme.

The NPS was introduced by the government in April 2004, to cover all entrants in government service. It was subsequently extended to the general public later. At that time, around 23 States in the country had notified adoption of the NPS for their employees.

However, even after six years, the implementation of the scheme has not taken off. According to the 13th Finance Commission Report (2010- 2015), only 12 States have executed their agreements signed with the Central Record Keeping and Accountancy Agency (CRA). In the case of NPS, the National Securities Depository Limited (NSDL) has been appointed as the CRA.The Report further states that an additional eight States have entered into agreements with the NPS Trust.

This lacklustre performance from the States has led to an abysmal transfer of funds worth Rs 133crore so far to the NPS. The amount is quite meagre compared to the total corpus that the government had transferred to pension fund managers. As on 31 March 2008, this amount stood at over Rs1,117 crore. Thus, the total amount transferred to the NPS stands at around 10% of the total amount that the Centre had allocated to the Scheme. According to the Report, this Rs113 crore is the transfer amount put together for only two States.

The Report states, “The contributions of State employees are lying in the State public accounts, earning a return equal to the interest rate allowed for the General Provident Fund. The migration to the NPS needs to be completed at the earliest.” The Report has also recommended a grant to assist States build a database for their employees and pensioners.

The Centre’s intentions may be noble, but if it can’t get the States to follow the NPS, how will it convince the general public to go in for what otherwise is a well-conceived scheme?




7 years ago

it is very right that govt is left with only one option left to promote NPS-ie to make a coke type ad starring non other then our Akki-and this NPS-should be well advertised in all cricket matches and live telecasts-so that masses of this country can come to know abt this TRAP the govt of india has derived for poor peoples welfare with agenda of "pension"from 'legal casino'-

Shobha Mathur

7 years ago

The Govt should turn over IPS ( Indian Pension Scheme) to be subsidiary of IPL. I did not realize that IPL was a CHARITY ! ( As explained why they were not paying Income tax!). Mr. Lalit Modi can run this scheme also as efficiently as IPL making millionaires of all us pensioners.


7 years ago

I am house wife.Can i deposit either in specified bank or post office or agent specified agent for that .e


7 years ago

where I can open the account whether is bank or post officeor any specified agent for that .Please carify it to me.

Roopsingh Solanki

7 years ago

i am damn sure that govt has launched NPS not for welfare-but to grab peoples money to use it in lavish useless projects which generate corruption to beurocrats and ministers-if i am a investor planning for my pension-i wud simply put 50% in debt market-and rest 50% in open ended sensex based fund-so why to go for NPS which is formulated on same ground-another juggelery and cheating scheme of our very clever govt-

Aviva Life appoints Sandip Mallik as HR director

The new appointee will be part of the core leadership team at the insurance company and will be responsible for the development and implementation of strategies

Aviva Life Insurance, a joint venture between the Dabur Group and Aviva Group, has said that it has appointed Sandip Mallik as director for human resources (HR). Earlier, Mr Mallik was heading the HR function at Emerson India.

Mr Mallik will now be part of the core leadership team and will be responsible for the development and implementation of strategies, policies and practices that will reflect Aviva India’s HR objectives, the insurance company said in a release.


Gold prices may climb to $1300/oz by next year

A report says that gold demand from investors worried about inflation and currencies should continue in 2010 and 2011 to make up for the steep fall in jewellery demand and scrap sales

Gold prices may rise above $1,300 per troy ounce by 2011 on record demand from investors worried about inflation, currencies and sovereign debt, a survey by UK-based consultancy GFMS has said, reports PTI.

Gold prices are averaging $1,113 this year, up from $972 in 2009, and are forecast to touch $1,150 in long term, the report said.

The demand sparked by investors worried about inflation and currencies should continue in 2010 and 2011 to make up for the steep fall in jewellery demand and scrap sales, says the report.

But a sharp correction is in store further ahead when inflation fails to run away and the US dollar escapes a dollar-crisis as some predict, it said.

GFMS chairman Philip Klapwijk said in an interview that he expects “the current strength in gold prices to moderate,” noting that (investment) demand will begin to wane as real interest rates rise and the safe haven properties of gold become less relevant under a more stable economic environment.

“We are entering the final stages of a bull market. But that doesn’t rule out the potential for some fairly fancy price gains before it reaches a peak in prices. We are actually pretty bullish over at least the next 6-12 months. By the end of this year, we believe prices will be near the $1,300 mark,” Mr Klapwijk said.

However, he said that the current trend in gold demand is not a reflection of a healthy underlying market as the demand for jewellery, the traditional mainstay of the gold market, has reduced to just 43%.

Jewellery demand was off by 25% (at 1,111 metric tonnes) over the past year, according to the GFMS survey.

Such demand is normally the mainstay of the gold market as it usually represents nearly 70% of total global gold demand.

Gold investment in 2009 surpassed jewellery buying for the first time since 1980.

That's why Mr Klapwijk suggests, “The rise of gold prices is not sustainable because record investment buying at some point will fall off.”

While jewellery demand has begun to recover from last year’s “exceptionally low levels,” the report suggests that prices will have to fall sharply to bring traditional gold buyers back to the market.


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