Features, Accessibility, and Cost Efficiency of NPS

OutlookIndia

#OutlookEvents | At IDFC FIRST Bank presents Outlook Money 40 After 40, Suparna Tandon, CEO, NPS Trust, discusses how NPS has transformed into a flexible, transparent, and cost-effective retirement solution. With seamless accessibility and low costs, it’s empowering individuals across sectors - from gig workers to government employees - to secure their financial future.  #IDFCFIRSTBank #CelebrateRetirement #OutlookMoney40after40 #OutlookMoney #40After40 #FinancialPlanning

Transcript

00:00It was first started for the government employees some years back.

00:05Then by 2009, it was open to the corporate and the all-citizen model.

00:09Yeah, one more fact that I wanted to tell is that pension becomes more important for the unorganized sector

00:15because for the central government and the state government, it is compulsory.

00:19But if you look at the fact that more than 90% of the labor force in India comes from the unorganized sector,

00:24so that sector is what we need to target, the gig workers, the self-employed professionals.

00:31Coming back to NPS, why is it accessible?

00:34Anyone with a KYC can open an NPS account.

00:38Initially, it was meant for people above 18 and up to 70 years,

00:43but now with NPS Vatsalya, even a child, a newborn child can have an NPS Vatsalya account,

00:48which the parents open, and at 18 on attaining maturity,

00:52it gets converted into a normal NPS account.

00:55So that's accessibility.

00:58You can open an NPS account simply by going to the NPS Trust.

01:04You have your KYC, you go to the eNPS portal,

01:07you open your NPS account with the click of a button.

01:10Or you go to a POP and your NPS account gets opened.

01:14That's how accessible it is.

01:15When it comes to democracy, or the democratic nature of the NPS,

01:21it's the most cost-effective pension product across the world.

01:28The cost structure is just 0.005 to 0.009% for a subscriber,

01:35depending on the scheme that you are choosing, or the sector that you are choosing.

01:39If you compare that with a mutual fund investment, or any other investment option,

01:45that would be somewhere in the range of 1.5% or even higher.

01:49So if you're investing the same amount of money over a period of 30 to 40 years,

01:53you are saving that much in cost if you're investing in NPS.

01:58So there are so many other features which one can talk about.

02:01You can port your scheme.

02:03It's flexible.

02:04You can port it across any pension fund managers.

02:06Right now we have 11 of them.

02:08You can port them across various schemes.

02:11You can, depending on your appetite, risk appetite, and how much return you want,

02:18you can choose a scheme of your choice.

02:20So it's flexible.

02:21It's transparent.

02:23If you want to know how well your money is performing,

02:25you just have to go to the NPS website,

02:27and you can compare the returns of pension funds and schemes across periods of time.

02:32You can calculate backwards.

02:34If you want to know how much pension you want to draw,

02:38say, after 30 years, and how much you should save,

02:42you know, subject to a certain amount of return that you would like to have,

02:46or the annuity that you would want to get at retirement,

02:49you can plan, you can calculate forwards and backwards.

02:52So it's transparent, it's flexible, it's portable, it's easily accessible.

02:57And that's why I think it's a very efficient and accessible product.

03:04There you go.

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