The NPS was introduced amid much fanfare by the previous government, as a much needed reform in social security. This far-reaching initiative was intended to serve as a vehicle for retirement savings. Five years down the line, there are very few takers for the scheme, even among Central government employees.
The NPS, introduced in 1 January, 2004, is mandatory for Central government employees who joined service on or after that date. The scheme was subsequently opened to all citizens on voluntary basis with effect from 1 May, 2009. Citizens, especially in the non-government segment, have shown complete apathy towards the NPS. The number of non-government subscribers to NPS registered as of 21 October 2009 is a minuscule 2,321. The response from government employees too is not very encouraging. The total Central government employees registered under the NPS is just 5,38,276 and in case of State government employees, the figure stands at a mere 1,10,024. Considering that there are more than 50 lakh government employees in India, these numbers indicate the true extent of penetration achieved by the NPS.
To popularise the scheme, the Pension Fund Regulatory and Development Authority (PFRDA) has appointed 22 Points of Presence (PoPs) and six Pension Fund Managers for offering NPS to citizens. Branches of the registered PoPs designated as PoP Service Providers (PoP-SP) act as the initial point of contact and collection points for all citizens other than government employees desiring to obtain a Permanent Retirement Account Number (PRAN) under NPS. There were in all 798 PoP-SP branches as of 16 October 2009, and between them, these branches have managed to collect only 2,291 application forms so far. The poor response to NPS can be attributed to several reasons like higher enrolment cost, lack of confidence in the system and absence of distributors. Also, distributing and managing NPS funds is not exactly a profitable proposition.
– Sanket Dhanorkar [email protected]