Corporate NPS And EPF Must Coexist For Employees, Says Rahul Ravindran Of PFRDA

Rahul Ravindran, Executive Director, Pension Fund Regulatory and Development Authority, spoke about the need for the co-existence of National Pension System (NPS) and the Employees Provident Fund(EPF) for creating a retirement-ready India.

In his speech delivered at the Retire Smart: Financial Wellness Leadership Series, Ravindran addressed corporate human resources and finance professionals and emphasised that companies must integrate the corporate National Pension System (NPS) into their employee benefit structures.

Ravindran highlighted a limitation in the current retirement framework and mentioned that while the Employees Provident Fund (EPF) is a reliable savings instrument, its pension component leaves a gap for private sector workers earning above the statutory threshold. He said that the regulator does not view the two schemes as a binary choice.

"Now, the thing is that we at PFRDA, we are not putting anything between NPS and EPF. It is EPF and NPS," Ravindran said.

He added that one of the risks of depending solely on provident funds is that typically, the retirement corpus dissipates quickly as individuals withdraw their provident fund money as a lump sum. Thus, these funds are then spent on meeting immediate needs rather than generating sustained income. He noted that provident funds offer guaranteed savings but need to be supplemented by dedicated pension planning.

"Provident fund and NPS, they are complementary, they are not against each other," Ravindran said.

Ravindran added that one of the key reasons why the corporate adoption of NPS ends up getting stalled is internal friction. Human resources teams seeking to implement benefits tend to encounter resistance from finance departments concerned about administrative overhead, while finance teams often cite a lack of future planning.

"So HR will say, Sir, we are trying to do everything that is possible, but the finance is not giving support," Ravindran said.

Ravindran highlighted that for the successful implementation of EPF and Corporate NPS, both departments need to work in tandem. Thus, to ease these concerns, companies must realise they have complete freedom in structuring pension contributions.  Employers can opt for nominal matching contributions of one or two per cent, or facilitate voluntary employee deductions.

Ravindran also spoke about the mindset of younger employees and acknowledged the widespread preference for high liquidity investments like mutual funds. He recognised that young professionals naturally lean toward short-term financial goals and desire access to their funds at will.

"Gratification, instant gratification is something that we all want, nobody is saying that we have to keep everything accumulated for a real old age because we have also actually lived in life," Ravindran said.

However, he warned against neglecting retirement security. He said that long-term discipline is essential to harness the power of compounding and build a dedicated corpus.

"Money has to be invested for some period of time, and you have to allow the money to grow, you read a purpose," Ravindran said.

Ravindran urged corporate leaders to take proactive steps and initiate regular contributions; companies can help employees build a substantial retirement corpus. Doing so can transform financial security post-retirement from an abstract concept into a tangible reality for the modern workforce.