India’s National Pension System is the lowest-cost pension product in the world, paying one basis point for every R100.
The system, however, is being looked at again for improving distribution and increase pension coverage, said Hemant G Contractor, chairman of the Pension Fund Regulatory & Development Authority (PFRDA). Contractor also said the PFRDA was looking to change the compensation given to distributors and fund managers. “It will not increase sharply, but we will probably restructure compensation,” he said.
The lower compensation slowed the pace of increasing pension coverage, Contract said while talking to The Financial Express on the sidelines of the CD Deshmukh seminar on ‘Increasing Longetivity: Opportunity for Annuity and Old’ at the National Insurance Academy in Pune. Right now, NBFCs and MFs are the most active in selling pension products.
Speaking on the ‘Challenges in the Indian Pension Industry’, Contractor said the country’s population was expected to grow to 32.3 crore and life expectancy set to increase to 72.9 yearsby 2050. For this, he said, pension coverage needed to be improved.
He was hopeful of increasing pension coverage in the country when the PMJDY will include NPS Swavalamban from August 15, 2015, for broader financial inclusion.
