Unlocking pension funds for infra financing a priority: PFRDA Chairperson

At the BFSI Insight Summit 2026, PFRDA chief S Ramann outlined plans to expand pension coverage, strengthen APY, integrate NPS with payroll systems and fund infrastructure

Expanding pension coverage beyond the formal sector, improving retirement income and unlocking long-term domestic savings for infrastructure are some of the Pension Fund Regulatory and Development Authority (PFRDA)’s key priorities. In a fireside chat at the Business Standard BFSI Insight Summit 2026, PFRDA Chairperson S Ramann discusses plans to strengthen the Atal Pension Yojana, (APY) integrate National Pension System (NPS) with corporate payroll, and attract foreign capital. Edited Excerpts: 

 

What are the key priorities for PFRDA regarding India’s pension coverage, which remains limited, particularly among informal-sector workers?

 

India needs to look at what its citizens’ lives will be like 25 or 45 years from now. The fundamental public policy question is whether every citizen will enjoy the privileges that people have today. If we can make it easy for people to open an NPS account for their dom­e­stic help, drivers and oth­ers around them, and co­ntribute as little as ₹10 a day, would they do so? If we do not act today, we could have nearly 60 crore people dependent on the government in their old age. When I joined the PFRDA in June 2025, there were around 7.2 million NPS accounts in the non-government sector, despite the country having a very large working population. We have inc­reased that number by about 2.2 million over the past 12 months, but the ambition must be to take coverage to over 10 million. Our challenges fall into three broad areas: expanding distribution and collections, investing pension savings to generate long-term returns, and ensuring that accumulated savings translate into a regular income after retirement.

 

 

The government has emphasised expanding pension coverage beyond the formal sector. How can schemes such as APY help? 

 

APY is an excellent scheme designed for Indians outside the income-tax bracket, who account for a substantial proportion of the working population. Subscribers can join between the ages of 18 and 40 and receive a guaranteed monthly pension of ₹1,000 to ₹5,000 from the age of 60, depending on their contribution. However, people in villages are already asking what a pension of ₹1,000 a month will mean after 20 years. So, we need to listen to people on the ground and examine how the scheme can be strengthened. We are working on how better asset allocation can help improve pension outcomes, including whether the pension can be indexed to inflation. 

 

This is a significant financial modelling challenge as the scheme must remain affordable while ensuring that pension funds can meet their obligations. APY's costs are currently around 0.3 per cent of assets under management (AUM) annually. We need to preserve this low-cost structure while exploring ways to improve outcomes. The scheme has around 90 million subscribers, and we need to expand its reach further.

 

Can the recently launched NPS Central platform make it easier to bring new subscribers into the system?

 

NPS Central is primarily a service initiative designed to make it easier for subscribers to manage their pension accounts. It brings multiple accounts together and allows people to undertake various transactions through a single interface. Subscribers can now open multiple pension accounts, with greater flexibility in choosing among the available central recordkeeping agencies and their offerings. The objective is to give people more choice and make the system easier to navigate… If UPI can be operated at scale across the country, enabling payroll software 

 

to deduct NPS contributions should not be difficult. We are already speaking to human resource management software providers about this.

 

Can employees contribute to NPS in addition to their Employees’ Provident Fund (EPF) savings?

 

There is no fundamental technological obstacle. It is largely a question of making the necessary changes to payroll systems so that employers can facilitate NPS contributions. The broader point is that people should have the freedom to choose how they invest their long-term savings once their mandatory PF contributions have been made. Pension savings must be viewed over a much longer horizon. At the PFRDA, we have decided against discussing NPS returns over periods shorter than three years. The real benefit comes from compounding. Returns may vary from year to year, but what matters is how investments grow over the 30-40 years during which people accumulate retirement savings.

 

Is there scope for greater coordination between the PFRDA and the EPFO?

 

There is a need to share best practices so that long-term savings can be managed more efficiently. Fragmented pools of retirement savings can make it difficult to achieve scale and manage investments efficiently. At the same time, if customers are to have a better choice, they should be able to compare the two systems and select what works best for them. Competition between pension products and providers can help improve outcomes for subscribers.

 

Globally, pension funds are key investors in infrastructure. Can India mobilise more domestic retirement savings for long-term infra financing?

 

Pension funds provide patient capital, and countries across the world have benefited from deploying pension savings over long investment horizons. India can learn from these experiences and build its capabilities more quickly. Banks remain cautious about infrastructure projects because of execution risks. Pension funds could potentially participate at a later stage, once projects become operational, and hold those assets for longer periods. This would require substantial capacity building. India has 14 pension funds… and we need to develop their investment capabilities. The PFRDA must also frame investment guidelines carefully as we have a fiduciary responsibility towards subscribers’ money. We are examining how pension funds can participate more meaningfully in infrastructure financing. A committee is looking at the issue, and we have begun taking steps to broaden the investment avenues available to NPS funds, including investments in alternative investment funds. The investment guidelines would need to evolve to allow a measured allocation to infrastructure. Even a small proportion of pension assets could make a meaningful difference, given the size of the country’s long-term savings pool.

 

Would this require changes to the existing investment guidelines?

 

Yes. The investment guidelines need to be sufficiently robust to protect subscribers, but they should also allow pension funds to invest a portion of their assets in infra financing. We need to build the right skills, establish appropriate safeguards and take incremental steps to enable pension savings to support the country's long-term capital requirements.

 

With 100 per cent foreign direct investment permitted in the pension sector, have you seen interest from overseas investors?

 

We need to understand the nature of the pension fund business. The capital requirement for setting up a pension fund is relatively small. We require a net worth of ₹50 crore, and the business largely involves mobilising savings from citizens and investing them on their behalf. The greater opportunity is to attract long-term capital from countries such as Japan and South Korea, where investors are interested in India’s growth prospects. If domestic pension funds develop the skills to invest effectively, foreign investors could participate alongside them through co-investments. That could bring in more capital, diversify the pool of investors and introduce better practices from other markets.

 

People are living longer, but the annuity products available offer limited flexibility. Is the PFRDA considering alternatives?

 

We commissioned an actuarial study comparing the cost of providing retirement income through insurance-company annuities, as is currently done, with the possibility of pension funds providing similar arrangements. The study indicated a difference of around 200 basis points. We need to introduce greater competition into the annuity market. Without competition, customers can end up with products that work better for manufacturers than for them. There is nothing inherently wrong with annuities. They provide a stream of income, typically for the remainder of a person's life. But the market needs greater variety. At present, the available products are relatively limited, whereas other markets offer different types of annuity products. The challenge is to develop alternatives that provide retirees with a more appropriate balance of income, flexibility and long-term financial security.