The upper age limit for joining the National Pension System (NPS) has been raised to 65 years from the current 60, the Pension Fund Regulatory and Development Authority (PFRDA) announced on Monday.
PFRDA Chairman Hemant Contractor made the announcement at a conference here on “Transferring Superannuation Funds to National Pension System” and said the pension regulator’s board had already approved the change and it would be notified shortly.
“NPS is currently open for people between 18 and 60, and our Board has approved raising the age limit for joining to 65,” Contractor said.
“The scheme anyway has the option of continuing and making contributions up to the age of 70,” he added.
Explaining that the rationale behind government reforms in pensions is to facilitate ‘portability’ -- or the transfer -- of superannuation funds by making the NPS more attractive and customer-friendly, he said the measures were designed to give the pension scheme an unbundled architecture to make it as competitive as possible.
“The aim is to open up pensions to sectors that are without pensions,” he said, noting that only 15-16 per cent of employees in India are covered by pensions because an overwhelming 85 per cent of the workforce is found in the unorganised, or ‘informal’, sector.
Elaborating on the benefits of the NPS, Contractor said it is the lowest-cost pension product in the world today. “Costs are important because even one per cent difference in cost over 25-30 years, makes around 15-16 per cent difference at the end because of the compounding factor,” he added.