Lukewarm response to NPS remains a challenge

Reforms will help establish a credible social security system, specially for the elderly

Economic survey has said lack of awareness and access points for people to open their accounts individually have been major  are the major challenges before New Pension System (NPS) on supply side.

It has called on Pension Fund Regulatory and Development Authority (PFRDA) to address the supply side issues immediately in NPS which has received lukewarm response till now.  

Economic survey has pointed also pointed out that lower levels of financial literacy particularly among workers in the unorganised sector, non-availability of even moderate surplus, and lukewarm response so far from most of the state and union territories governments to a co-contributory Swavalamban Scheme are the major challenges for universal inclusion of poorer sections of Indian society into the pension network.  

However it said that pension reforms in country have generated widespread interest internationally. Reforms will not only facilitate the flow of long-term savings for development but also help establish a credible and sustainable social security system in the country.

In insurance sector it said in the insurance products limited choice and high cost of providing covers and assessing claims are some of the issues that need to be suitably addressed to make insurance funds an effective means of channelising savings to investments.

In a situation where returns from financial instruments have not been able to beat inflation, investors have increasingly started in physical assets like gold and real estate.