PFRDA expects 2-3 crore new NPS subscribers over next two years
Quick Look
- PFRDA chairman S Raman announced plans to allow regulated entities to invest directly in large infrastructure projects beyond current REITs, InvITs and AIFs mechanisms, with a committee studying the approach.
- PFRDA aims to add 20-30 million new NPS subscribers in the next two years, focusing on informal workers, self-employed and small business owners, while noting most NPS-covered employees do not opt for the Unified Pension Scheme despite its assured 50% inflation-indexed pension.
AI-generated summary
Why It Matters
PFRDA regulates India's National Pension System (NPS). The Unified Pension Scheme (UPS) offers an assured inflation-indexed monthly pension equivalent to 50% of average basic pay from the last 12 months. Currently, pension investments flow through REITs, InvITs and AIFs for infrastructure exposure.
NEW DELHI: The Pension Fund Regulatory and Development Authority (PFRDA) is preparing a roadmap to allow entities regulated by it to invest directly in large infrastructure projects, beyond the current mechanism of investing through ReITS, InVITS and alternate investment funds (AIFs), chairman S Raman told TOI. "A committee has been set up to look at the issue, and internal discussions are under way to evolve a mechanism where PFRDA can invest directly in such projects. It will be long, patient capital and may be possible at least five years down the line," said Raman on the sidelines of an event on NPS Diwas. Globally, Canadian pension funds are known to invest directly in big infra projects, including in India, and they hold a significant stake in such projects, including through equity. "All such modalities are being looked into," said Raman. At the event, financial services secretary Sanjay Lohiya said that as the domestic "pension kitty" grows, people are hopeful that a lot of long-term investment, particularly in infrastructure, will be provided by these pension funds.
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"Risk, reward and the quality of investment have to be kept in mind, but govt and other stakeholders are hopeful that slowly our pension funds will be able to provide patient capital." The officer also said that despite the government introducing the Unified Pension Scheme (UPS), which provides an assured and inflation-indexed monthly pension equivalent to 50% of the average basic pay drawn in the last 12 months, most employees covered under NPS "choose" not to opt for the scheme. Raman also said that PFRDA is stepping up efforts to expand NPS beyond govt employees and the corporate sector, with focus on informal workers, self-employed people and small business owners. "PFRDA aims to add two to three crore subscribers to the NPS in the next two years."
End of Article
What to Watch
AI outlook — possibilities, not facts
PFRDA will finalize a mechanism for direct infrastructure investments by regulated entities within the next five years
Likely · Within years
NPS will add approximately 2-3 crore new subscribers in the next two years
Possible · Within years
Open Questions
- What specific infrastructure sectors will be prioritized for direct investment?
- What regulatory changes are needed to allow direct PFRDA-regulated investments in infrastructure?
- How will PFRDA incentivize informal sector workers to join NPS?
- Why do most NPS-covered employees not opt for the Unified Pension Scheme despite its benefits?
