27,000 Firms Offer Corporate NPS, But Only 11% Employees Opt In: How India Inc Is Solving The Take-Home Pay Dilemma

More than 27,000 corporate entities across India have officially registered for the corporate National Pension System (NPS). However, voluntary employee adoption within these enrolled firms is around 10-11 per cent, according to Pension Fund Regulatory and Development Authority (PFRDA) figures. 

At a panel discussion held at the Retire Smart: Financial Wellness Leadership Series, a collaborative initiative by PFRDA and Outlook Money, industry leaders from the human resources (HR) domain and finance talked about how Corporate NPS can be positioned as an HR best practice in India.

The panellists spoke about the challenges in urging employees to opt for corporate NPS. They cited the behavioural challenge that staff at the entry and mid management level face when they have to choose between investing for their retirement or having more liquid cash to handle day-to-day expenses.

Ambikesh Vyas, chief human resources officer (CHRO) at Bhagwan Mahaveer Cancer Hospital & Research Centre, spoke about the reality of negotiating compensation with professionals who are focused strictly on their immediate cash flow.

“A person who is earning Rs 35,000 per month, the first question that comes every time in a negotiation is mera take home kya hoga,” Vyas said.

Hemant Mathur, chief financial officer (CFO), Celebal Technologies, explained that workforce skepticism often undermines new internal benefit programs when they are presented directly by management. “HRs function within the terms of shared services and there’s a relationship of mistrust,” he said.

However, faced with these challenges and the low voluntary uptake for corporate NPS, employers are moving toward creative compensation restructuring. Across the board, the panellists indicated that their priority is shifting toward ensuring that employees do not perceive long-term pension deductions as an unwelcome pay cut, but rather as an essential part of their financial planning journey.

Puneet Jain, chief people officer at Kogta Financial, explained how his team actively redesigns compensation structures to ensure workers maximize the actual purchasing power of their earnings. Rather than simply inflating base salaries, Jain explained that his team focuses entirely on the tax efficiency of the pay package.

By positioning corporate NPS as a primary tax saving vehicle, his HR team helps employees shield a larger portion of their income from immediate taxation. This restructuring shifts the focus from a raw cost-to-company (CTC) figure to net retention, thereby allowing employees to build a robust, inflation-beating retirement corpus while keeping more of their current earnings intact.

“For any HR professional, the primary area of concern is always retention, and when it comes to retention, certainly the internal growth opportunities play their own vital role, but yes, looking out for creative means to get the better yield of the salaries that they are getting in their hands,” Jain said.

“Certainly the compensations remain what they are supposed to be aligned with the industrial practices, but still how can we make it much more sensible, in the sense of yield that they can get out of it… designing the compensation in such a manner that a 100 rupee yield may probably become a 90 rupee yield in their hands versus any 85 or 87 rupee yield (that is the question),” he added.

Jain further emphasised that this strategy serves a dual purpose: immediate tax relief and long-term wealth protection.

“I am still the flag bearer for NPS as a tool to at least save tax 30 per cent today, but yes, certainly the retirement corpus or big corpus can certainly take care of our inflation, real life cost of life, and might help address the lateral concerns,” he added.

As corporate human resource divisions test these practical nudges on the ground, the pension regulator is preparing a major infrastructure overhaul to remove operational pain points. Transferring accounts across employers and changing intermediaries has traditionally posed administrative difficulties, but an automated solution is poised to enter the market soon.

Sumit Kumar, chief general manager at PFRDA, said that a centralised digital portal modelled after successful mutual fund platforms will soon roll out to simplify onboarding and servicing. “Corporate NPS would be in a better shape maybe in 3-4 months from now as far as the digitisation of the product is concerned. We are trying to create an NPS central,” Kumar said.

As leadership within the human resources space seeks to resolve technical and psychological hurdles associated with corporate NPS adoption, the broader workplace perception of the pension framework is also transforming. Rather than functioning simply as a dry tax deduction exercise, companies are leveraging retirement planning to gain an edge in talent management.

Vyas noted that senior executives and top candidates now routinely treat pension benefits as a benchmark during recruitment discussions.

“It can be a good recruitment tool when you're trying to hire senior leaders,” Vyas said.