The Reserve Bank of India committee on household finance (Ramadorai Committee) has commented on the low pension participation of Indian households. This is something that several committees constituted by the Pension Fund Regulatory and Development Authority (PFRDA) have also worried about. The Ramadorai Committee as well as the PFRDA committees have suggested increasing the incentives of distributors (and fund managers) to incentivise people to join the National Pension System (NPS). But before we tinker with the basic framework and philosophy behind the NPS, it is useful to agree on what low pension coverage means and the place of the NPS in such a framework.
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