PFRDA chief S Ramann wants to plug NPS into corporate payroll systems

Pension regulator in talks with HRMS providers to enable salary-linked contributions; sees scope for pension funds to finance infrastructure

S Ramann, Chairperson of the Pension Fund Regulatory and Development Authority (PFRDA), on Tuesday called for integrating National Pension System (NPS) contributions into corporate payrolls, enabling employees to save for retirement through salary deductions alongside Employees’ Provident Fund (EPF) contributions. 

Speaking at the Business Standard BFSI Insight Summit here, Ramann said the move would require relatively minor modifications to existing human resource management software (HRMS), not an overhaul of payroll infrastructure. 

“If we can run UPI (Unified Payments Interface) for 700 or 800 million people in our country, this is child’s play,” Ramann said. “It is a matter of the HR team in a particular corporate looking at a patch in their HRMS software, which simply says you can deduct NPS.” 

PFRDA is already engaging with technology providers to enable the integration. “We are already talking to several HRMS providers in the country,” Ramann said. 

Embedding NPS contributions into routine payroll deductions could simplify participation and eliminate the need for employees to make separate contribution arrangements. 

Ramann highlighted the potential for pension funds to emerge as an important source of long-term financing for infrastructure projects, given their ability to invest over extended periods. “Without doubt, the world over, every country has grown on the back of its pension because that is the true patient capital that’s available,” he said. 

Pension funds could invest at different stages of infrastructure development, including after projects become operational, when construction and execution risks have eased. Greater participation, however, the PFRDA Chairperson said, would require carefully framed investment guidelines and fund managers with the expertise to assess such opportunities. 

“Everybody is going to be cautious, but it's about getting the right skills to do the right job,” he said.