The New Pension Scheme is a great idea and one which has been successfully executed despite not having the parliamentary mandate for it. But if, as you argue, the scheme may not take off due to a lopsided incentive structure (‘Attractive over the long term’, May 4), the government needs to rethink its strategy. The NPS is a welcome break for all of us who have had to contend with the poor service of the EPFO and if it doesn’t take off, that will be unfortunate. The obvious way is for the government to pay the costs of those who have NPS contributions of, say, less than Rs 10,000 a year — this will amount to a few hundred rupees a year, and will promote the savings habit among those who need to save for their old age but are deterred by the high commissions/costs of 12-13 per cent on savings of Rs 6,000 a year.
The government should also think of routing cash transfers through the NPS. In a sense, this is already being done in some states — the Rajasthan government used to have a scheme where cash was transferred to the bank accounts of those below the poverty line. Another possibility is to plan on pension schemes for the poor where the full amount of contribution, not just the payment of bank/NSDL charges, is made by the government.
Sanjiv Shankar, Mumbai