Pension Fund Regulatory and Development Authority (PFRDA) Chairman Yogesh Agarwal on Tuesday said there were some flaws with the New Pension Scheme (NPS) and the regulator is taking steps to improve the scheme.
"...when we extended NPS to the private sector, we made the basic mistake of not changing the features which we have to take into account now," Agarwal said on the sidelines of a National Conference on Pension Funds organised by ASSOCHAM.
He said about 350 corporates have joined the scheme.
"I am very happy to share that about 350 corporates have joined NPS. However, given the size of the country, this is a minuscule number," Agarwal said.
On steps taken to incentivise the scheme, PFRDA chairman said," We have taken steps in revised guidelines to increase fee charged by the pension fund managers which will make them come up with economically viable model, and where(ever) they have to invest in marketing and distribution network".
Earlier, fund managers were getting only 0.0009 per cent as charges for the funds managed by them as incentives.
Agarwal expressed hope that with the measures the pension fund regulator has taken, NPS will emerge as the best pension option.
"With the measures, we have taken, we are sure NPS will take off and emerge as the best pension option," he said.
Initially, the government had launched the New Pension System for those Central Government employees joining service from January 1, 2004, but later it was extended to all citizens from May 1, 2009.
The new NPS guidelines allow the PFRDA to increase the number of fund managers from the present six to an unrestricted number along with liberalising it to any financial institution that fits the eligibility criteria to be a fund manager.
The total corpus of the government employees under NPS as on December, 2011 was Rs 12,769 crore (Rs 127.69 billion). The total average monthly subscriptions of government employees is around Rs 500 crore.