The government is moving fast on pension reforms. While the finance ministry is ready to take the Pension Fund Regulatory and Development Authority (PFRDA) Bill to the Cabinet for approval this week, interim pension regulator PFRDA has drawn up a multi-pronged strategy to expand the reach of the new pension scheme (NPS).

The PFRDA Bill, floating in suspended animation since the NDA regime, is on the finance ministry?s priority list for introduction and passage in upcoming Winter Session. The ministry is also considering PFRDA?s proposal to grant annual incentives to intermediaries selling NPS to help propagate the retirement savings habit in India?s 400 million-plus workforce, 90% of whom have no social security net.

The regulator will also launch a Rs 10-crore advertising campaign for NPS shortly. It also has plans to set up an online investment facility and appoint new sales intermediaries, including 2,000 high-traffic post offices across the country.

Since NPS was opened up for voluntary pension accounts this May, the scheme has got just about 2,400 memberss. Sprucing up the scheme?s sales front is important as some of the initial points of purchase (PoPs) appointed by PFRDA have failed to open a single NPS account.

?We have proposed to the government that some incentive must be provided to the PoPs for opening NPS accounts, beyond the transaction cost of Rs 20. It could be a volume-based incentive that is paid annually. It?s not a question of how much money is coming in, but of how many people join up,? PFRDA chairman Dhirendra Swarup told FE.

The regulator has also decided to allow subscribers to open an NPS account on the Internet and switch between PoPs. ?We will be allowing inter-PoP transfers in the next 6 months. It will be possible to open an NPS account on the Web. ICICI Bank has already done a test run and NPS accounts can be operated online from November 15,? Swarup said.

Addressing the India Economic Summit here on Sunday, Prime Minister Manmohan Singh underscored the importance of a ?strong pension sector?– a sign that government is to reform the pension sector with a view to strengthening the country?s social security net.

The second week of November will also see the unveiling of a Rs 10-crore advertising campaign to create awareness about the NPS. The PFRDA has sealed a pact with the Department of Posts that will add 2,000 major post offices to the NPS sales force at the same time.

?This will give a dimensional change to the NPS. At the beginning, only 2,000 branches will market the NPS, as our basic criteria of computerisation and electronic connectivity has to be met so that they can transfer data and money,? he explained.

The push factor apart, the PFRDA is adding new features to the NPS that should attract potential investors and has raised the minimum age to join the scheme from 55 years to 60. ?We will be launching the Tier II account from December 1, which will operate like a savings account that allows withdrawals. It will be open to everyone till the age of 60 years. Tier II will also attract people to the Tier I pension account,? Swarup said.

Since pension wealth can be withdrawn from an NPS account up to 70 years of age, the Tier II savings account can also be operated till then. ?This also gives an opportunity to existing government employees to park part of their accumulated retirement savings with the NPS,? Swarup suggested.

Without legislative backing, the regulator needs government?s nod for all its ideas, making the PFRDA Bill?s clearance imperative for efficient regulation and development of India?s fledgling pension funds space.

The PFRDA has already requested the government to take care of the record-keeping costs for all NPS account holders, not just civil servants. The central record-keeping agency of the NPS, National Securities Depository Limited, charges Rs 470 per account annually ? which would reduce as the NPS? membership base expands

The Cabinet note seeking a nod for introducing the PFRDA Bill was ready over a fortnight ago, but the finance ministry did an internal reshuffle on the pension portfolio about the same time. Pension sector issues have been moved from the charge of KP Krishnan, joint secretary in the Department of Economic Affairs, to joint secretary Tarun Bajaj in the department of financial services.