By Shweta Aggarwal, IFMR Rural Finance
The Committee to Review Implementation of Informal Sector Pension (CRIISP) recently released their report focusing on National Pension Scheme (NPS), its design architecture, its performance till date and recommendations for increasing outreach and awareness about the product. The committee recognises that the current design of NPS excludes a large part of the population engaged in the unorganised sector. It gives recommendations on different aspects of the product, its cost structure, delivery channels and strategies for marketing and promoting the product to make it more accessible for the end customer.
We go over some of the recommendations and analyse benefits if these do get accepted.
Given all these recommendations, it is important to implement a regulatory framework that addresses cases of mis-selling and aligns distributor incentives with customer incentives, especially when broad basing distributions agents. The report suggests that PFRDA develop this framework based on a code of conduct for NPS distributors. This should be implemented along with other changes to encourage responsible scale-up.
NPS has the potential to meet needs of millions of retirees in India through offering a competitive, fair and convenient savings option. The CRIISP report presents a thorough analysis of the products and the importance of aligning product design and delivery with these needs. We believe if these recommendations are accepted, NPS will be able to effectively address the problem of an ageing population in the Indian context.