Path-breaking pension programme

There is growing awareness among Non-Resident Indians (NRIs) in the Gulf about the National Pension System (NPS), the flagship programme in India's pension sector, says Hemant G. Contractor, Chairman, Pension Fund Regulatory and Development Authority (PFRDA).
In an interview with Khaleej Times at his New Delhi office, Contractor said he would like to expand the scheme to a large number of NRIs in the Gulf. "I believe we should canvas more aggressively with NRIs in the region," he said. "They are increasingly getting to know about the scheme."
Recently, the Indian government asked Passport Seva Kendras (which are thronged by Indians aspiring to go abroad on jobs, and even NRIs when they are home on work) to publicise the NPS schemes among overseas Indians, he adds.
According to Contractor, the PFRDA will soon be appointing 'retirement advisers' for NRIs in the Gulf. "These will primarily be firms operating in the financial sector, who have good contacts in the NRI community," he pointed out. 
Indians working in the Gulf, especially the labourers have no option for pension schemes there, he says. "And most blue collar workers do not have adequate savings that will see them through in their old age. Pension schemes are very essential for such people."
The PFRDA has been publicising the pension schemes in the Gulf and the response has also grown rapidly. "Earlier, we were getting just 15 to 20 new accounts every month, but today this has gone up to about 150 new NRIs signing up every month," he says. "But we would like this figure to grow to 1,000 to 2,000 new accounts being opened by Gulf-based NRIs every month."
As in India, NRIs have to invest a minimum of Rs500 a year in the funds, but there is no upper limit to how much they can channelise into the pension funds.
Besides the Gulf, the PFRDA is also focusing on Singapore, which has a large number of Indians working there, and who will ultimately have to return to India. 
The PFRDA, which administers and regulates the National Pension System (NPS) in India, has been reporting rapid growth in the scheme. Last year, points out Contractor, it saw a phenomenal 47 per cent growth, touching nearly Rs2 trillion.
"The subscriber base grew by 28 per cent and we now have about 16.4 million subscribers," he explains. "Even this year we are growing at the same pace." The pace of growth usually picks up towards the last quarter of the year, just before people have to file their tax returns.
The NPS funds are usually invested in equities, and government and corporate bonds. Overall returns, however, have been averaging at about 10 per cent annually.
Unlike Canadian and Australian pension funds, the PFRDA does not invest directly in equities, but goes through the stock market. "We invest in infrastructure bonds and trusts and real estate investment trusts," he adds. "But we cannot invest abroad."

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