The government has thrown open the New Pension Scheme, or NPS, to the private sector and individuals. Come October, any company or individual can join the scheme ?by filling up a form.?
This is the UPA government?s first major initiative, after the Left?s departure, to take the stalled pension sector reforms forward. Without waiting for the passage of the pending PFRDA Bill, the finance ministry, through a recent executive order, has directed the pension regulator, the Pension Funds & Regulatory Development Authority, to start designing pension schemes for the entire working population, which includes the unorganised sector, the private sector and individuals.
PFRDA, in its scope of activities thus far, had confined itself to designing a broader pension system involving switching from the earlier defined benefit system to a defined contribution one for the central government employees?19 states have agreed to join NPS?who have joined after January 1, 2004.
While inaugurating the Central Recordkeeping Agency for NPS, established by the National Securities Depository Ltd (NSDL) in Mumbai on Friday, finance minister Palaniappan Chidambaram said: ?We have already asked the PFRDA to design pension schemes for individuals. We want the entire working population to get a chance to save while working.??
Speaking to FE, D Swarup, chairman, PFRDA, said the authority is already on the job after being asked by the government.
?We had only focused on central government employees thus far, as we had not received any mandate to extend our activities. Now, we have received the mandate through the executive order and have begun the process for opening up the NPS where anybody can participate by filling up a form. We don?t have to wait for the passage of the PFRDA Bill,?? he said.
Elaborating on the PFRDA action plan further, a senior official of the authority said: ?We are planning to roll out the system for the private sector and individuals by October.?
For the time being, PFRDA would launch the new schemes through the existing three fund managers of three state-owned institutions-State Bank of India, UTI Mutual Fund and the Life Insurance Corporation. ?Afterwards, the number of the pension fund managers would be expanded to include private sector fund managers,?? the official said, adding that the Central Recordkeeping Agency will be facilitating the expansion of the NPS for the unorganised sectors.
Subscribers of NPS would enjoy facilities such as portability across jobs and locations, choice of pension funds and investment schemes, freedom to switch between service providers and nationwide access over the Internet and telephone.