NRIs urged to invest in pension scheme back home

dubai - India's National Pension System offers around 10% returns for subscribers

India's National Pension System (NPS) is an excellent retirement or long-term investment product with around 10 per cent returns for its subscribers, who are either based in India or abroad.

This was echoed by top government officials and bank executives during a one-day conference in Dubai on Saturday. They emphasised that the scheme is an easily accessible, low-cost, tax-efficient, flexible and portable retirement savings scheme for all Indian citizens.

Administered and regulated by the Pension Fund Regulatory and Development Authority (PFRDA), the scheme is mandatory in India for government employees. Since May 2009, the NPS was extended to the private sector too.

Non-Resident Indians (NRIs) can also subscribe to this scheme. There are millions of NRIs working across the globe but NPS subscribers are in the hundreds only.

As of October 15, 2016, there were 13.7 million subscribers under the NPS and the Atal Pension Yojana (APY) schemes with a contribution of Rs1.2 trillion and with total assets under management of Rs1.53 trillion, according to the PFRDA.

NPS online
Around a year ago, eNPS, or NPS online, was introduced to make the account opening hassle-free, specially for NRIs, but only 538 NRIs availed this facility during the year, PFRDA member (Economics) Dr B.S. Bhandari told Khaleej Times on the sidelines of the conference.

Bhandari said: "We are here [in Dubai] to educate NRIs about the benefits of this scheme so more people can avail it. It will make their life easy post retirement."

Talking about subscribers' investment in the NPS, he said the funds are managed by seven pension funds appointed and actively monitored and regulated by the PFRDA - a regulator set up through an act of Parliament.

He mentioned that the funds' portfolio is diversified, with a mix of investment instruments and asset classes such as equity, corporate bonds and government securities to ensure optimum returns on investments and minimal impact on returns even if there is a market downturn.

The PFRDA data shows attractive returns since the scheme's inception. For example, there is an average rate of return at 10.83 on government securities, corporate bonds at 11.67 per cent and equity return is 11.48 per cent.

In the UAE, there are 15 banks' offices where NRIs can submit a physical application form for the NPS scheme. Minimum investment of Rs6,000 is required to open the account. There is no limit for maximum contribution but a minimum contribution of Rs2,000 is required during a financial year.

NRIs can open NPS accounts both on repatriable and on non-repatriable basis by remitting the contribution amount through their NRE/FCNR/NRO accounts.

Earlier, addressing the conference, State Bank of Travancore managing director C.R. Sasikumar said the NPS is a good vehicle for social security of NRIs and their families for pension requirements.

PFRDA chief general manager A.G. Das said: "Growth in NPS is quite encouraging but NRIs are not participating significantly. That's why we are here in Dubai."

NPS returns might be the same compared to other products in the country but it's the lowest cost product that makes the difference on maturity, he emphasised.

- abdulbasit@khaleejtimes.com

• India