Senior citizens who have not yet got into the National Pension System (NPS) bandwagon may have some cause for cheer. Pension regulator PFRDA plans to soon extend the maximum entry age for availing NPS benefit to 70 years from the current 65 years, its Chairman Supratim Bandyopadhyay said on Thursday.

Simultaneously, the exit age limit is proposed to be extended from 70 years to 75 years, he said at a virtual press conference. Currently, Indians between the age bracket of 18-65 years can open an NPS account. Bandyopadhyay highlighted that there is good interest among those who are above 60 years to open an NPS account and noted that nearly 15,000 new NPS subscribers (aged above 60 years) had enrolled for NPS in the last three years.

Subscriber growth

Bandyopadhyay said that despite adverse situation of COVID-19, the assets under management of NPS saw 38 per cent growth in FY20-21and 6 lakh new NPS subscribers were added .

The Pension Fund Regulatory and Development Authority (PFRDA) Chairman said he was confident that AUM— which stood at ₹5.78 lakh crore as of end March 31, 2021– will grow at least 30 per cent this fiscal and that the aim will be to add at least 1 million new NPS subscribers this fiscal. He also said that the recent budget announcement on taxation of interest on annual provident fund contribution in excess of ₹ 2.5 lakh could prompt subscribers to shift to NPS and this could bolster AUM growth.

Pension fund managers

Bandyopadhyay said that as many as eight pension fund managers including the earlier seven have qualified under the recently floated Request for Proposal (RFP) for selection of sponsors of pension funds for NPS. Axis Asset Management is the new fund house that has qualified besides the existing seven fund managers. However, Tata Asset Management Company and DSP Investment Managers (India) Pvt Ltd did not make the cut although they had applied in response to the RFP.

PFRDA will soon open a window of 30-40 days when PFM licences will be available on tap for those who meet the set criteria, he said.

The PFRDA Chairman also said that the regulator will in the next 30-45 days float a Request for Proposal (RFP) and invite actuarial firms to help design a “minimum assured return” product for the pension sector. In the wake of fall in annuity rates in the recent times due to sharp fall in interest rates, the PFRDA may also soon allow subscribers with corpus of upto ₹ 5 lakhs to withdraw their accumulations on retirement funds without mandating their investment in annuity. Currently, the regulatory norms require a person on retirement to invest at least 40 per cent of the retirement funds in annuities.

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