PFRDA chief Deepak Mohanty denies guaranteed pension.
PFRDA chief Deepak Mohanty denies guaranteed pension.
Deepak Mohanty, the head of the Pension Fund Regulatory and Development Authority (PFRDA), stated that the PFRDA has no plans to introduce guaranteed pensions. Mohanty, on the other hand, favours giving residents a variety of options so they can combine their finances for their golden years through one such programme or a combination of them all.
“Even while our pension corpus is a huge Rs 9.58 lakh crore in absolute terms, it only accounts for around 3% of GDP. “Our total pension assets, which include pension from APY, EPF, and other sources, do not exceed 16% of GDP, the speaker pointed out.
When this occurs, the World Bank reports that the global average in this area is 29.44%. In fact, the assets of some of the finest pension plans in the world range from 90 to 100% of their GDP.
Guarantees have a price, according to Mohanty, although one with relatively smaller returns. NPS, on the other hand, now offers a good income, with 1-year returns close to 12.57%. Any assurance will undoubtedly undermine this. In a sense, big profits are guaranteed for subscribers who ride out market cycles and remain invested in NPS over the long term, he adds. The minimum assured returns system, which is in the works and is reaching a decision after consultations, he claimed, will not be affected by this.
Additionally, unlike with APY, PFRDA would have to provide the necessary funds to provide the guarantee rather than the government. In contrast to NPS, the chairman emphasised the gender balance among Atal Pension Scheme subscribers. According to recent data, enrollments in APY have reportedly been mostly influenced by uptakes in the lowest slab, or Rs 1,000. Additionally, these were initiated by unorganised sector workers, who are mainly between the ages of 21 and 30.
Mohanty underlined how the existing NPS system is developing while acknowledging the severe shortage of pension literacy in India. However, given the job structure in India, where 90% of the population works in the unorganised, informal sector without a stable, reliable source of income, making it mandatory would not be practical.
