The New Pension Scheme (“Do we need to revamp the NPS?”, August 4) is hardly the perfectly designed scheme that former PFRDA chief D Swarup makes it out to be. The fact of the matter is the scheme needs to be sold through brokers and commission agents, and as long as they get more money from selling mutual funds and insurance products, they are not going to sell the New Pension Scheme (NPS). If the solution of raising the commission on the NPS is not acceptable, the only other alternative is to reduce the commissions on the other products by fiat. And that can’t be done in a free market.
Swarup and others argue that the biggest benefit under the NPS is the co-contribution that the government makes — the finance minister even announced this in one of his Budgets. This is good in theory, but how do you tell a family that you want them to contribute a certain amount of their earnings to the NPS every year for the next 20-30 years, but the money the government gives in their name will only be available at the end of the scheme? Maybe this is something that the financially literate and the financially well off will appreciate, but it is quite meaningless for a family which is not well off or is even tottering on the edge of poverty — any scheme where the investments cannot be taken out in times of emergencies is simply not going to work.
Arun Gulati, Noida
