Corporate NPS Subscription Up In Recent Years, But Not Among Younger Employees

The uptake of the Corporate National Pension System (NPS) has improved in the last few years. However, the uptake among the younger generation of employees has been low, panellists said at the Retire Smart: Financial Wellness Leadership Series, a collaborative initiative by PFRDA and Outlook Money.

Out of the total subscriber strength of eight million belonging to the non-government sector, three million belong to the corporate sector. In the last 5-6 years, the growth has been 200,000-300,000 each year for the corporate side, and now the corporate side alone has like almost 2.80-2.90 million subscribers, Sumit Kumar, CGM, Pension Fund Regulatory and Development Authority (PFRDA) said.

To a question on the growth in the uptake of Corporate NPS, especially with new schemes coming in, Kumar said that NPS is essentially a voluntary scheme and it ultimately depends on the company’s human resources department to provide NPS as an option to the employees.

“Some companies may not offer it right now, but even where it is being offered, the uptake rate is 10-11 per cent only. But in a few companies, the upgrade has been more than 90 per cent. We are trying to create a lot of awareness sessions across different cities for the same,” he said.

He added: “The average number of corporates that we onboarded used to be like 3,000-4,000. But last year, we onboarded more than 5,000 corporates (new corporates). At present, we have around 26,000-27,000 corporates. In the last quarter alone we added 300,000 subscribers from the corporate side.”

Prashant Kumar, DGM - HR, Holography Business, Uflex, said they began offering Corporate NPS in 2019, but it was restricted only to the senior management. “Now people have started showing interest in this and that's where we got a good number of nominations and participation and we have all voted a sizable number,” he said.

Awareness Level Low Among Entry Level, Younger Employees

Prashant Kumar, however, added that the awareness level needs to be enhanced, and not at the mid- and senior- level, but at the entry level.

Vinod Gattani, a senior finance professional, said one reason for the low uptake is that the younger generation of employees do not take retirement into account so early. That's a major reason for the low uptake of NPS.

“However, if HR and management come into the board and they will push for the employee that NPS is useful then it will be fruitful for the employee as well as employer both in terms of retirement savings and financial stability and employee retention in many other benefits, the uptake among the younger generation will increase,” Gattani said.

Sumit Kumar added that a lot of changes have also been made in NPS, giving more flexibility to subscribers, including in terms of withdrawal.