 "PFRDA seeks tax parity for NPS contributions with PF contributions")
The Pension Fund Regulatory and Development Authority (PFRDA) has sought a level-playing field for corporations in making contributions to the National Pension Scheme (NPS) so that they are at par with contributions made in provident fund (PF) for employees in respect of tax treatment.
Currently, the tax exempt contribution is capped at 10 per cent for NPS while it is 12 per cent for PF.
The authority has made a case for bringing parity (between NPS and PF) to support growth of pension products, said Deepak Mohanty, chairman PFRDA, in reference to Budget expectations for 2024-25.
The plan is to take it to 14 per cent over a period to encourage wider acceptance of pension, he added.
Referring to subscribers enrolled in the current financial year (FY24), Mohanty said their number stood at 0.53 million. This included 99,977 corporates and 429,187 citizens, as of December 31, 2023.
The target is to add 1.3 million subscribers in FY24. The fourth quarter ending March 2024 is expected to see a higher level of subscription as people look for tax-saving options, he added.
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The total subscriber base was 5.1 million with assets under management (AUM) of Rs 2.04 trillion for NPS in December 2023.
The authority is expecting the subscriber base in the private sector to cross 5.5 million and grow to Rs 2.2 trillion at the end of March 2024.
The average returns generated by pension funds from equity were 24.21 per cent for one year and 13.31 per cent since inception. The corporate bonds gave a return of 7.37 per cent in one year and 9.08 per cent since inception, PFRDA data showed.