Such a move will bring the employees on par with private individual subscribers, who already enjoy the facility to choose their fund managers.
“The plan to provide choice to government employees for deciding their fund managers is consistent with the design of NPS architecture as a subscriber-centric model,” RV Verma, PFRDA Member.
As on date, over 70 per cent of the NPS corpus of ₹82,000 crore comprises contributions from Union and State government employees.
Currently, it is the Centre or the State government that chooses the fund manager for the NPS contributions.
Empowering the subscriber to choose the fund manager will allow these government employees the option to take risk and maximise pension, according to Verma.
The facility of switching from one fund manager to another is also proposed to be provided, he said, adding that this will ensure that pension fund managers do not become complacent.
Verma also said the plan to provide choice to government employees is also in line with the Bajpai panel’s recommendations to widen choice for NPS subscribers — whether it be in the case of fund managers or the basket of instruments in which funds could be parked.
Add on choice
“The existing system (of government deciding the fund managers) will continue. We are only going to add choice to the government employees who are NPS subscribers,” Verma said.
In 2004, the Centre had moved away from defined benefit pension system to a defined contribution pension system.
All new entrants into government service after January 1, 2004, had to mandatorily go in for NPS.
Currently, the Centre and 27 States have adopted NPS.