Despite incentives announced by the Finance Minister in the Union Budget, not many people have opted for the New Pension Scheme (NPS) as a saving tool for retirement needs. Now in its fourth month of operation, the NPS, the lone government-sponsored retirement plan for the informal sector, has managed to attract just 1,100 subscribers in a country of more than a billion. Total assets under management now stand at a little over Rs 1 crore.

Conceived after ten years of research, discussions and heated debates by various think tanks, politicians and committees, the scheme finally kicked off this May Day. The seeds for pension reforms in the country had been sown in 1998 when the Ministry of Social Justice and Empowerment commissioned Project OASIS. Presenting the Union Budget in 2001, then Finance Minister Yashwant Sinha had laid the road map for a new structured, defined contribution pension scheme for civil servants and general public.

The scheme in its original form allowed greater equity exposure and was considered the safest way to channelise the country’s pension monies and ensure high returns. But the conservative attitude of some of the political parties led to change in the architecture of the plan. In 2003, the Department of Economic Affairs notified NPS for Central government employees.

It took five more years for the government to offer this safety net to 87 per cent of the country’s population that works in the informal sector and has no recourse for saving retirement money. Now, marred by low investor awareness and tax-related issues, the scheme has managed to get just 350 subscribers in its first month of operation and a total subscription amount of Rs 6 lakh.

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