New pension system: Govt to strengthen PoPs

The Government is looking at ways to popularise the new pension system (NPS) by strengthening the distribution base to reach out to the informal sector, a finance ministry official said today.

Of the total 24 lakh subscribers of NPS, only around 45,000 are from the informal sector. NPS is a government-run retirement scheme for individuals, including those in the unorganised sector.

“We are aiming at increasing the subscriber base by way of strengthening Points-of-Presence (PoPs), which will enable us to reach out to people,” the official said.

PoPs are the first points of interaction with NPS subscribers. Authorised branches act as collection points and extend customer services. There are about 30 PoPs in the country at present.

The official said the ministry is looking at ways to reduce expenditure and reach out to people to increase participation.

“We need to increase awareness among people about NPS. We are trying to find ways to reduce distribution expenses and involve state agencies to reach out to the informal sector,'' the official said.

Of the total NPS subscribers, over 7.92 lakh are central government employees, 9,042 are from private companies and 41,826 are employees from central autonomous bodies. About 7.84 lakh subscribers are from state governments.

Earlier this year, a committee set up by the Pension Fund Regulatory and Development Authority (PFRDA) had suggested substantial lowering of the cost of buying NPS, besides providing incentives to distributors.

The report also recommended bringing down the minimum annual subscription of Rs 6,000 for the main NPS to Rs 1,000 per year to ease the entry barrier for investors. It would also help attract lower-end customers towards NPS.

NPS, launched for all citizens in May 2009, failed to take-off due to lack of sales ‘push’. So far it has attracted only 50,000 individual buyers, out of the over 400 million workforce in the country.

Source:The hindu