The informal sector does not have access to NPS, and even if it gets access, there is no statutory requirement, which is creating a gap in coverage, Mohanty said at the launch of Association of NPS Intermediaries.
He said the association will help to expand the growth of NPS.
The association of stakeholders including pension fund managers, bank and non-bank points of contact, custodians, aggregators, pension agents and retirement advisers among others, will foster collaboration and strengthen NPS subscriber welfare.
NPS fund managers are currently managing Rs 14 lakh crore investments across 80 million active accounts, which could cross Rs 15 lakh crore by the end of this year, Mohanty said.
Pension assets in India account for only 16-17% of gross domestic product (GDP) compared to 80% in OECD (Organisation for Economic Cooperation and Development) countries, he said. NPS accounts for around 4% of GDP, he added.Mohanty said nearly 75,000 people have been onboarded under the Vatsalya NPS retirement saving scheme for children. Clubbing of pension products
Speaking at the event, Rama Mohan Rao Amara, managing director of State Bank of India, said India stands at a demographic crossroads, having the largest workforce globally with a median age of 29 years.
“This provides an immense opportunity in terms of coverage. And, of course, as the years go by, we will also have a sizeable proportion of the aged section, which creates a challenge in ensuring their financial security in the later part of their life,” Amara said.
Amitabh Chaudhry, managing director and CEO of Axis Bank, suggested unifying various pension-related products like EPFO, NPS, superannuation funds and insurance or mutual fund pension products under a single regulatory and investment framework. This would help customers simplify decision-making and enhance regulation, he said. Chaudhry also suggested that salaried employees should be allowed to choose between EPFO and NPS. This flexibility would enable employees to align their investments with their financial goals.
Challenges ahead
Siddhartha Mohanty, chairman of Life Insurance Corporation, said while India is one of the world’s youngest nations, the number of senior citizens in the country is projected to grow to 170 million by 2026 from 140 million in 2021 and further to 200 million by 2031. This shift presents challenge as well as opportunity, he said.
“The challenge lies in ensuring financial security for a rapidly ageing population. The opportunity, however, is the potential for NPS to become the cornerstone of India’s pension ecosystem,” the LIC chairman said.
