India Will Have 300 million Senior Citizens by 2050; National Pension System Needs To Evolve Accordingly

A Conference on the National Pension System was held in New Delhi today, with the prime objective of providing a platform to discuss and deliberate on key issues encountered in the coverage of pension sector, including the budget announcements relating to the tax benefits and the need and ways to expand the pension coverage across the country.

The Conference saw participation of all the major Public and Private Sector Banks and the non-Bank Point Of Presence (POPs). In the inaugural address, Dr Badri S Bhandari, Whole Time Member, PFRDA welcomed the participants and brought to fore the scope of improvement vis a vis performance of the POPs in expanding the coverage of NPS in the Private and Corporate segment while acknowledging the good work done by some of the POPs.

Currently, the unorganised (all citizen segment) and the Corporate sector comprises of only 5.6% of the subscribers and 9.0% of the AUM under NPS and only 7500 out of 55600 POP branches i.e. 13%, are active in sourcing NPS accounts. He emphasised the need for the activation of all the branches of POPs who are the eyes and face of the system and awareness creation and quality service to the subscribers. He informed that PFRDA is exploring the development of NPS module linked with core banking solutions of the Banks in line with the APY module.

Hemant G. Contractor, Chairman, PFRDA, in the keynote address, stressed upon the need to expand the coverage of pension sector across the informal sector in the country which occupies almost 90% of the workforce. India has the highest percentage of informal workforce in the world, which is largely uncovered by any pension scheme. The demographic changes impacting the need to provide for pension includes increasing longevity, nuclear families and the ever increasing proportion of old age people, especially women whose longevity is higher.

These factors have brought the issue of pension centre stage in most of the policies of nations worldwide. NPS has the advantage of market commensurate returns, flexible options, transparency and low cost. He also added that effort was required to meet the challenges facing the unorganised sector including low awareness, low income levels and the lack of long term vision to save for the future.

Moreover, 10% of the senior citizen population in the world resides in India and this number would increase from current 100 million to 300 million by 2050 and hence the sense of urgency to expand the coverage to meet the challenge of exponentially increasing fiscal pension liability. PFRDA is planning a nationwide training programme for all the government and non-government nodal offices primarily to increase the awareness and expand the reach of NPS into the nooks and corners of the country.

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