NPS adoption by govt employees hit 6-month high in September: NSO data

The adoption of the National Pension System (NPS) by government employees rose for a third consecutive month to a six-month high in September, signalling acceleration in fresh formal hirings in the public sector.

According to the data released by the National Statistical Office (NSO) on Friday, the number of new monthly subscribers under the central and state government components of the NPS collectively increased by 7.8 per cent to 61,897 in September from 57,399 in August. In March, 85,586 government employees had joined the NPS. 

The Centre has mandated the NPS for all its new employees. So, analysts believe the monthly subscription figures are a proxy for new employment generation by the central government. Under the central component, 18,937 employees joined the NPS in September compared to 17,092 in August.

Meanwhile, 42,960 employees joined the NPS in September under the state component, up from 40,307 in August. However, since a few Opposition-ruled states like Rajasthan, Chhattisgarh, Himachal Pradesh, Jharkhand, and Punjab had announced a return to the Old Pension Scheme (OPS), the NPS numbers cannot be used as an exact metric to gauge hirings at state level.

Of the new subscribers at both the state and central level, the share of young subscribers, belonging to the 18-28 age group, increased to 47.3 per cent (29,333) from 43.3 per cent in August (24,835). This is crucial because people belonging to this age group are first-timers in the job market and thus reflects the robustness of the job market.

However, the increase in new NPS subscribers at government level in September comes in the wake of the decline seen in the formal employment during the same month under the Employee Provident Fund (EPF). The number of new EPF subscribers fell to a six-month low of 891,583 in September from 953,092 in August.

“While recruitments are happening at government level, they only reflect a very marginal portion of the total workforce in the country. The decline seen in formal and wage employment, as reflected in the EPFO data and the recent PLFS data, shows that the job market isn’t generating enough jobs for the ever increasing labour force,” said Santosh Mehrotra, visiting professor, University of Bath.

Meanwhile, the number of new subscribers under the corporate component declined by 17.4 per cent to 11,421 in September from 13,829 in August. This comprises either voluntary subscribers or mainly employees of central and state public sector undertakings along with those in the private sector. 

Managed by the Pension Fund Regulatory and Development Authority (PFRDA), the NPS is designed on a defined contribution basis. Here, both the subscriber and the employer contribute an equal amount to a person’s account. It was made mandatory for all new central government employees from January 1, 2004, except armed forces.