Interim regulator PFRDA has decided to enhance incentives to distributors from Rs 50 to Rs 150 for each subscriber for the current financial year, a move aimed at popularising the citizen pension plan, which has received lukewarm response.
"With a view to boost the Points of Presence (PoPs) efforts to enroll more subscribers in NPS, the PFRDA has decided to enhance, with immediate effect, the monetary incentive for subscriber acquisition from Rs 50 to Rs 150 for the current financial year," Pension Fund Regulatory and Development Authority (PFRDA) said in a statement.
Currently, there are 35 PoPs, including major banks like State Bank of India and ICICI Bank, which act like contact and collection points for customers wanting to be part of New Pension System (NPS).
A low incentive to PoPs has been viewed as one of the reasons for the lukewarm response of the NPS.
PFRDA further said that the incentive is meant to help PoPs in capacity building for promotion of NPS and redouble their efforts to popularise NPS and bring a large number of subscribers to the NPS.
Initially, the government launched the New Pension System for central government employees joining service from January 1, 2004, but it was extended to all citizens from May 1, 2009.
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However, the citizen pension scheme received a lukewarm response and only around 30,000 subscribers joined the scheme in 17 months.
In August, PFRDA had set up a committee headed by former SEBI chairman G N Bajpai to overhaul the structure of pension scheme.
The committee is considering if there is a need to alter the present incentive structure of various stakeholders, and to suggest a viable economic incentive model.
It is also examining whether it is desirable to have differentiated incentive structures for the government and non-government segments. The committee is likely to submit its report next month.