NPS adoption by central public sector at 13-month high in February

Adoption of the National Pension Scheme (NPS) by the employees of central government and central public sector enterprises (CPSEs) increased to a 13-month high in February, signaling accelerated fresh formal hiring by the public sector.

The latest NPS data released by the National Statistical Office (NSO) on Tuesday showed the number of new monthly subscribers under the central component of the NPS increased by 7.5 per cent to 13,282 in February from 12,349 in January 2023.

Earlier, 13,421 new subscribers had joined the NPS in January 2022. 

Since the Centre has mandated the NPS for all of its new employees, analysts believe the monthly subscription figures can be considered as a proxy for new employment generation by the central government and CPSEs. 

 

Of the total 13,282 new subscribers who joined the NPS in February under the central government and CPSUs, the share of women subscribers, however, fell to 20.7 per cent from 29.1 per cent in January. 

Similarly, the share of young subscribers (18-28 years) also fell to nearly 64 per cent in February from 70 per cent in the preceding month. The rise in new subscriptions in February was led by people of 28 years of age and above, as their share rose to 35.9 per cent from 29.9 per cent in January.

However, Mukesh Anand, assistant professor at the National Institute of Public Finance and Policy (NIPFP), said the spike in the new subscribers in February was not entirely due to the new hiring and could be a result of the increase in tier-II or voluntary accounts under the NPS as a number of employees tend to take the benefit of tax rebates and other incentives provided under it, at the end of the financial year. 

“Hence, the current spike shows that the NPS can be made attractive with the right incentives. It is hoped that the recently formed committee to review the NPS would come up with the right innovations. Moreover, this spike could also be a result of the various Rojgar Melas that the prime minister has been conducting in the previous months and those bulk appointments are now beginning to show up,” he said.

The spike seen in the new subscribers in February under the NPS comes in the wake of the massive decline seen in the formal employment in February, as new monthly subscriptions under the Employee Provident Fund (EPF) fell to a 21-month low (738,052), from 819,659 in January. 

Similarly, according to the data released by the Centre for Monitoring Indian Economy (CMIE), which conducts its own surveys, India’s unemployment rate had risen to 7.45 per cent in February from 7.14 per cent in the previous month. 

The NPS data showed the new subscribers under states fell for the fourth consecutive month to 33,152 in February from 35,253 in January.  

Earlier, a few Opposition-ruled states, including Rajasthan, Chhattisgarh, Himachal Pradesh, Jharkhand, and Punjab, had announced a return to the Old Pension Scheme (OPS), thereby abandoning NPS. Hence, it cannot be used as an exact metric to gauge hiring at state level.

Managed by the Pension Fund Regulatory and Development Authority, the NPS is designed on a defined contribution basis, wherein both the subscriber and the employer contribute an equal amount to his/her account. It was made mandatory for all new central government employees from January 1, 2004, except the armed forces and, thus, the NPS data can be used as a proxy to gauge the number of new jobs created under the central government.