By IANS,
Chennai : Tamil Nadu, Kerala and Maharashtra are the three states that are yet to get on board the National Pension System (NPS) for their employees despite issuing notifications to that effect, said the pension regulator here Friday.
“Twenty-three states have joined NPS while two southern states Tamil Nadu and Kerala have not joined the pension scheme despite issuing notification to that effect. Maharashtra is another state that is yet to join the NPS,” Yogesh Agarwal, chairman, Pension Fund Regulatory and Development Authority (PFRDA), said.
He was speaking at a financial sector conclave – “Emerging Paradigms in South India” – organised by the Federation of Indian Chambers of Commerce and Industry (FICCI).
“We are in touch with the governments of Maharashtra, Tamil Nadu and Kerala. We are yet to get funds from them.
“Two states – West Bengal and Tripura – have not notified about joining NPS for their employees,” Agarwal told IANS on the sidelines.
According to Agarwal, the other two southern states – Andhra Pradesh and Karnataka – and the union territory of Puducherry account for around 350,000 subscribers with assets under management (AUM) of around Rs.2,605 crore covering around three-fourths of their eligible state government employees.
He warned that the pension burden on the state governments would increase and eat into the funds of other social welfare measures.
Agarwal said the pension expenditure is more than current revenue in some states like Nagaland where it is about 135 percent of the revenue.
He said the position is better in the case of southern states, with Kerala’s pension bill taking the maximum of 23 percent of the revenue and for Karnataka it is 12.7 percent of the revenue.
“However this is still substantial in terms of opportunity cost of foregone developmental expenditure with the goal of universal pension still remaining elusive,” Agarwal added.
He said the NPS has around 5.2 million subscribers and manages around Rs.35,000 crore of funds.
According to him, around 820 corporates have joined the NPS in the last couple of years and the number is growing. “This is probably because NPS-Corporate model also provides a platform to the corporates to co-contribute for employee’s pension and enables the employer to outsource the administrative, record-keeping and fund management functions to NPS at no additional burden,” he said.
He said the one disadvantage the scheme suffers is that it is yet to achieve the tax equivalency with other financial products like employees provident scheme, public provident fund and others which have – exempt-exempt-exempt (EEE)- tax status whereas NPS is subject to tax at the end of the period.