Pension Fund Regulatory and Development Authority (PFRDA) in collaboration with Confederation of Indian Industry (Noida chapter) organized a 'Webinar on National Pension System for Corporates' with the theme of 'Importance of Retirement Planning - Role of NPS.' Around 40 corporates were present during the webinar. Shri Supratim Bandyopadhyay, Chairman, Pension Fund Regulatory and Development Authority (PFRDA) was the keynote speaker of the webinar.
Speaking at the webinar, Shri Bandyopadhyay said, "By 2050, one out of five people will be of more than 60 years old. Not only for the reason that the population in India is aging fast, planning early for retirement is very much required."
He noted, "It is seen that the person who retires at the age of 60 years lives for another 18 to 20 years, so unless you are financially protected it will become difficult to lead a decent lifestyle post retirement."
National Pension System ensures right kind of retirement planning as there is an inbuilt mandatory requirement of annuity purchase with 40% of the accumulated corpus. NPS is the only product apart from a few insurance products which ensures a regular flow of income, the PFRDA Chairman observed.
Since total pension assets in India is only 14% of GDP compared to other countries where it is 80-100%, there is a lot to catch up and with financial literacy at 24%, nudging and mentoring is also required on the part of corporates for convincing their employees to join NPS. As of now, average percentage of corporate employees joining NPS is only two per cent (2%).
As far as tax benefit is concerned, NPS provides Rs 50,000 additional tax deduction benefit under section 80CCD (1B) over and above Rs 1.5 lakh provided under section 80C of the Income Tax Act, 1961.
NPS is growing at a decent pace, and there was 18% plus growth in the customer base even during the pandemic period, and 22-23% increase has been seen so far this year, he said adding "the growth in pension assets has been 35% and we are hopeful of achieving the target of Rs 6 lakh crore AUM by 31st March, 2021."
Though NPS is a market-linked product and as it is well managed, returns are very good, be it equity, Government Securities or Debt and the CAGR is 10%+ since inception (10 years period). If a person plans for long term, he will definitely get a good return, the Chairman added.
The total asset under management under NPS & APY amounts to over Rs 5 lakh 66 thousand crores. So far 8,300 corporates have registered with PFRDA, from which more than 11 lakh corporate employees are on board in NPS.