Fresh adoption of the National Pension System (NPS) by formal sector employees in the corporate segment fell to nearly a three-year low in November, according to the latest data released by the National Statistical Office (NSO) on Thursday.
The data shows that the addition of new monthly subscribers under the corporate segment fell by 25 per cent to 7,728 in November from 10,341 in October. Earlier, 6,451 new subscribers had joined the NPS in January 2021.
Meanwhile, the cumulative number of new subscribers, comprising central government employees, state government employees, and corporate sector employees, stood at 108,057 in November, up from 70,947 in the previous month.
The corporate component of the scheme is voluntary in nature and includes people working in public sector organisations, private limited companies, or public sector banks, among others.
The corporate segment of the scheme has witnessed a decline in recent months as the new tax regime doesn’t provide incentives to invest in pension schemes. For employees in the corporate sector who earn up to Rs 7 lakh and pay no taxes, there is no incentive to save through NPS.
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Last week, the Pension Fund Regulatory and Development Authority (PFRDA) Chairman Deepak Mohanty prodded banks to shore up fresh enrolments to achieve the ambitious target of enrolling 1.3 million new subscribers under the private sector of the NPS in 2023-24.
“If you look at the private sector component of the NPS, which includes corporates and individuals, we have a target of enrolling 1.3 million new subscribers this year. Of that, we have crossed the halfway mark until now (around 600,000),” Mohanty told reporters.
In the central and state government components of the scheme, the number of new subscribers stood at 16,737 and 83,592, respectively, during November, while 18,780 and 41,826 new subscribers had joined it in the previous month.
The Union government has mandated the NPS for all its new employees; hence, this can be used as a proxy to gauge fresh recruitments at the central level. However, since a few states like Rajasthan, Chhattisgarh, Himachal Pradesh, Jharkhand, and Punjab have announced a return to the Old Pension Scheme (OPS), thereby abandoning NPS, it cannot be used as an exact metric to gauge hirings at the state level.
Managed by 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 the armed forces.
Since April 2018, the NSO has been bringing out employment-related statistics in the formal sector, using information on the number of subscribers under the Employees’ Provident Fund Scheme, Employees’ State Insurance Scheme, and the NPS.