This refers to the interview with Yogesh Agarwal “PFRDA is addressing marketing and distribution issues” (May 6). The New Pension System (NPS) has some structural and technical flaws that are responsible for its tardy progress and equating these to “marketing and distribution” issues would be over-simplifying the real problem. There’s a need to take some timely corrective measures to make the product “user-friendly” and bring it on a par with other financial products in the market.
The slapdash manner in which the scheme was introduced for central government employees and the constant rate of return at eight per cent till 2011, despite the Pension Fund Regulatory and Development Authority’s claim of earning an average annual return of 12.5 per cent, speak volumes for the ad hoc implementation of NPS.
It is quite natural that there is little response from the private sector. It is unfortunate that without resolving the problems of acceptable returns on funds, adequacy of the product as a substitute for a time-tested social security instrument (a defined benefit pension scheme) and acceptance at the beneficiary level, the Centre is trying to impose NPS on states and on autonomous institutions like the Reserve Bank of India and other public sector units, including banks.
M G Warrier Thiruvananthapuram
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