In some good news, the Pension Fund Regulatory and Development Authority have announced that the upper limit to join the NPS or National Pension Scheme has been increased to 65 from 60.
PFRDA Chairman Hemant Contractor made the announcement at a conference "Transferring Superannuation Funds to National Pension System" and said the pension regulator's board had already approved the change and it would be notified shortly.
"NPS is currently open for people between 18 and 60, and our Board has approved raising the age limit for joining to 65," Contractor said. "The scheme anyway has the option of continuing and making contributions up to the age of 70," he added.
"The aim is to open up pensions to sectors that are without pensions," he said, noting that only 15-16 per cent of employees in India are covered by pensions because an overwhelming 85 per cent of the workforce is found in the unorganised, or "informal", sector. Elaborating on the benefits of the NPS, Contractor said it is the "lowest-cost pension product in the world today".
"Costs are important because even one per cent difference in cost over 25-30 years, makes around 15-16 per cent difference at the end because of the compounding factor."
The regulator also said that PFRDA had asked the Central Board of Direct Taxes (CBDT) to provide a blanket approval for the transfer of superannuation funds to the NPS, but was still awaiting a response from the CBDT. He suggested that companies should individually take up this matter with the CBDT, as the PFRDA is yet to hear from the income tax department.
Contractor explained that NPS enjoys special privileges on income tax that are not available to any other capital market instrument.
NPS has emerged as a scheme for income security of senior citizens, said the PFRDA Chairman adding that it had seen "good growth over the last one-two years".