Six months on and the only government-sponsored pension scheme, New Pension Scheme (NPS), is still struggling to attract workers in the unorganised sector who have no formal means to save for retirement. The scheme, launched on May 1 this year, has managed to rope in just about 3,000 subscribers and mop up a meagre Rs 3.5 crore as on October 31. India’s labour force in the unorganised sector is estimated to top 400 million workers.

“Most of the subscribers are from the low-age groups and have chosen active funds over the auto choice. Subscribers are investing more in equities,” said Dhirendra Swarup, Chairman, Pension Fund Regulatory and Development Authority (PFRDA). As on October 23, 22 distributors with 798 branches have collected 2,352 forms. The numbers are modest, but keeping in mind the amount of resources committed to make the scheme work, the regulator seems satisfied with the outcome so far.

The poor performance of the scheme has, however, left other stakeholders anxious. “The whole system needs to be revisited. Due to high CRA (central recordkeeping agency) charges, the investors are not coming. On the other hand, low pension fund management charges are deterring fund managers to take any initiatives. We also need an active distributor on the ground to make the scheme work,” said Balram Bhagat, chief executive officer, UTI Retirement Solutions.

According to industry critics, the scheme is plagued with serious implementation issues and needs much higher resources and efforts to unorganised sector workers on board. “The scheme needs government funding and support. The regulator has spent a crore so far on the scheme. This cannot change the attitude of people in six months. There needs to be a better plan in place that targets smaller pockets and educate people on the need for retirement savings. The government should spend at least a dollar per person to inform and educate them and ensure success for this scheme. Otherwise, we will fail to see NPS ever fulfilling its aim of serving as a safety net for people in their sunset days,” said one of the members of the OASIS committee. This committee was formed in 1998 and had eight members who carved out the contours of pension reforms in the country.