With relaxed exit rules, flexible investments and a push to attract private, gig and self-employed workers, the Pension Fund Regulatory and Development Authority (PFRDA) now aim to align retirement savings with life needs—pensions, portability and potentially healthcare—creating a more inclusive, market-driven social security system, its chairman Sivasubramanian Ramann told Prasanta Sahu. Edited excerpts.
Over the last few months, several reforms have been introduced by the pension regulator. What is the larger objective behind these steps?
All these reforms converge on one central goal: to expand adoption of the National Pension System (NPS) among non-government subscribers. NPS is unique—it is completely voluntary, market-linked, and operates without any budgetary burden on the government. Unlike other financial products, the government neither holds pension fund companies nor bears any capital infusion responsibility. NPS represents a transparent, consumer-oriented, private-sector architecture. While mutual funds often serve short-term liquidity needs, NPS offers long-term savings discipline—an essential element of retirement security.
Why is expanding NPS participation among non-government individuals so critical?
Across financial products, NPS is the only instrument that allows wide distribution without fiscal implications for the government. It is a pure market-return product with no sovereign guarantees. We aim to make NPS naturally attractive to citizens by aligning it with their life goals—housing, education, healthcare, and retirement—rather than forcing behavioural change.
Reforms are in place, but how do you address implementation challenges and awareness?
The real challenge lies in outreach and education. Many people hesitate not because of digital barriers, but due to low confidence in long-term financial planning. A retirement product demands understanding and trust. Our task is to tailor NPS for different income groups, especially lower-middle-class households with competing financial priorities, ensuring that it fits naturally into their life-cycle needs.
Coming to the Unified Pension Scheme (UPS), why has uptake among central government employees been limited?
UPS was designed as a middle path between the old pension scheme (OPS) and NPS. However, many employees believe their NPS corpus can generate superior post-retirement income and inflation protection. Strong market performance has reinforced this confidence. The government’s role is to offer choices—not impose them. Interestingly, nearly 80% of Group A officers have opted for UPS, while others remain with NPS. In total, around 1,30,000 central government staff have opted for UPS (out of around 2.2 million).
How are state governments responding to UPS?
Several states—including Odisha, Maharashtra, Uttarakhand, and Karnataka—are actively engaging with us. Tamil Nadu is planning enhanced benefits such as dependent coverage and removal of minimum service requirements. These schemes will be managed under PFRDA regulations through pension funds and CRAs, even if states brand them differently.
With the Labour Codes now notified, will gig and platform workers be enrolled under EPFO or NPS?
The Labour Codes continue to define EPF and EPS strictly within an employer–employee framework. Gig and platform workers fall under a separate chapter that speaks of benefits, but it does not explicitly mention EPF or EPS. Therefore, it appears that statutory provident fund coverage may not automatically extend to gig workers. Importantly, many platform companies such as Zomato and Uber have already tied up to offer NPS to contractual workers. Unlike EPF, which is tied to a specific employer and often becomes cumbersome when changing jobs, NPS belongs entirely to the individual. It gives workers freedom, mobility, and continuity of retirement savings.
What is the progress on regulatory coordination for pensions?
Discussions are underway on allowing individuals to choose among PPF, EPF, and NPS rather than mandating a single option. The aim is harmonisation across regulators, sharing of databases, and prioritising citizen needs over departmental boundaries.
In old age, income support and healthcare costs are major requirements. Is PFRDA planning to integrate NPS with health benefits?
This is actively being explored. While no such product exists yet, there is potential to embed healthcare benefits within pension frameworks. Pension funds could negotiate benchmark rates with hospitals (aligned with Ayushman Bharat or CGHS), ensure fast payments, and offer affordable healthcare access to subscribers. Discussions are ongoing with hospital chains and third-party administrators (TPAs).
Could this lead to a new health-linked pension product?
Possibly. Just as NPS Vatsalya was introduced as a targeted product for young individuals, we are examining whether healthcare should be integrated into existing pension accounts or offered through a separate product. This would benefit all NPS subscribers.