Pension bill cleared, NPS to see exponential rise in subscribers
Legal backing likely to boost NPS corpus to $60 bn in one year, $300 bn in 10 years
With the passage of the Pension Fund Regulatory and Development Authority Bill, 2011 in the Lok Sabha on Wednesday, the National Pension System that boasts of nearly 53 lakh members is set to get an exponential increase in its subscriber base.
Pointing out that 88 per cent of India's workforce has no access to old age security, PFRDA chairman Yogesh Agarwal said that the scope of membership to the NPS is unlimited.
Experts believe that with statutory backing, the scheme could attract a significant chunk of the 46 crore workforce and the total corpus could rise by $60 billion in the first year of its full launch.
"The demand is huge. The passage of the bill will attract more subscribers as there is legal backing for a scheme that entails at least 20 years of savings. Civil servants have been the main subscribers to the NPS till now. But now, private sector companies and self-employed individuals will start to invest in the scheme," said Gautam Bhardwaj, co-founder and managing director of the Invest India Micro Pensions Services, adding that the NPS corpus could reach $60 billion in the one year and $300 billion over the next ten years.
Bhardwaj, who was also a member of the Old Age Social and Income Security Project (OASIS) report of 2000 that sowed the seeds for the NPS, believes that over Rs 10 lakh crore of investments is currently with superannuation schemes of private sector companies which could migrate to the NPS.
The OASIS report had noted that based on demographic projections the number of aged in the country would rise to 17.9 crore and comprise 13.3 per cent of the population by 2026. "Barely 3.4 crore or less than 11 per cent of the estimated working population in India is eligible to participate in formal provisions meant to provide old age income security," the report had said.