Summary of this article
PFRDA calls on mutual fund distributors to use StAR NPS portal to onboard NPS subscribers.
StAR NPS portal expands pension access in underserved areas.
The PFRDA Chairperson highlights equity growth and illiquidity value to create a corpus.
The Pension Fund Regulatory and Development Authority (PFRDA) has called upon mutual fund distributors (MFDs) and other distribution partners to use StAR NPS, a digital distribution platform to onboard subscribers, and enhance penetration in smaller cities, underserved communities, and the informal sector.
In the StAR NPS event held last week in Bengaluru, the PFRDA Chairperson, S Ramann, highlighted the need for retirement planning and emphasised that NPS works as an “income asset” rather than a “capital asset”. Speaking about long-term financial planning and saving, he said, “illiquidity is as important as liquidity” to create a retirement corpus, and that the NPS combines equity-led growth over the long term along with tax-efficiency benefits.
Lately, several changes have been made in the NPS, and several schemes have been launched to offer more choice to subscribers and improve scheme penetration in underserved segments. Some of the key changes include enhancing the membership age limit from the earlier 75 to 85 now, and introducing different withdrawal options (Systematic Payout Rate and Systematic Unit Redemption facilities under the Retirement Income Scheme) to provide a steady income during retirement years. The new launches include NPS Vatsalya (extending retirement planning to children), NPS Swasthya (offering pension security with health insurance benefits), and the NPS Central portal for subscribers for easy access to their NPS scheme-related information.
What Is StAR NPS?
The digital onboarding portal, StAR NPS, is developed with the support of BSE Technologies Private Limited (BTPL). The portal allows distributors (MFDs) to easily navigate between mutual fund products and NPS offerings and suggest them to their clients as per their requirements.
The distribution network is open to the MFDs, banking correspondents, primary agricultural credit societies (PACS), non-banking financial companies (NBFCs), and other eligible entities and individuals.
Financial Inclusion And Long-Term Planning
While PFRDA has launched several schemes under the NPS pension ecosystem, their adoption by the targeted segments is equally important for their long-term financial security. Notably, the platform significantly lowers the onboarding costs and minimises operational challenges in enrolling subscribers, especially when they are not from urban areas.
To encourage adoption of pension schemes, PFRDA offers higher incentives to those distributors who use StAR NPS compared to other channels. Moreover, the 15-year vesting period (full withdrawal is allowed after 15 years from NPS MSF schemes) is an opportunity for distributors to create sustained customer engagement.
As per the PFRDA’s press release, the regulatory body plans to collaborate with BTPL to deliver operational efficiency comparable to the registrars and transfer agents, like CAMS and KFin Technologies.
Finding the growing interest in equity in smaller towns alongside the threats of Ponzi schemes, PFRDA urges MFDs to bring regulated pension solutions to the people from the unorganised sector and utilise the StAR NPS platform to bring them on board.
