The New Pension Scheme: Good intentions, poor execution
Amritha Pillay 15 April 2010

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?

Comments
ROOPSINGH SOLANKI
1 decade 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
1 decade 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.
V.Ulagammal
1 decade ago
I am house wife.Can i deposit either in specified bank or post office or agent specified agent for that .e
G.somasundaram
1 decade 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
1 decade 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-
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