National Pension Scheme: For Whose Benefit?

Pension reforms in India in the last decade have seen three major initiatives – a paradigmatic shift in the civil servants’ pension scheme, the National Pension Scheme (NaPS) for all citizens and the New Pension System Lite for the economically disadvantaged sections with small savings. The NaPS has seen a lukewarm response so far, with a majority of subscribers being central and state government employees, for whom the scheme is mandatory. An analysis of the auto choice option under the NaPS and the demographic transition reveals potential future imbalances in the investment structure among the asset classes. Moreover, the NaPS does not even guarantee a minimum pension, thus defeating its 'welfare' orientation.