National Pension System: Market Pulse
-
Most organizations prefer to appoint Points of
Presence (administrators), which are banks with
whom the organizations have their salary or
corporate accounts. The key expectations from POPs
include professional service levels, quick resolution
Employees and Communication
One disturbing trend observed from the survey results is
the dismal participation/enrollment of employees in the
NPS scheme. Only 20% of the organizations that have
implemented the NPS have achieved employee
subscription of 10% and above.
An employer may have taken the first right step in
setting up the NPS benefit for his/her employees, but
the responsibilities continue beyond merely introducing
the scheme. The fact that the NPS is voluntary and the
employees can choose not to enroll for it makes it critical
for employers to have an active and smart communication
and awareness strategy around NPS. It is a clear challenge
for employers to educate their employees to the point
that they can make an informed decision about the
scheme, especially for the younger generation who is
openly inclined towards cash in hand. The strategy has
to be set using the latest communication tools and has
to be done on an ongoing basis in order to achieve a
better rate of participation. This strategy may include:
- Wider awareness around lack of retirement savings and
the eroding power of inflation in India
- Use of retirement and savings calculators to demonstrate
ideal Net Replacement Ratios post retirement
The modes of communication could be regular emails,
posts on the intranet, presentations, social media
campaigns, workshops, etc.
-
Having a different strategy for blue and white collar staff
Employers should also be careful not to hard sell the NPS,
and the communications should be more holistic in nature.
It should be made sufficiently clear to employees that
returns from NPS are market-linked and that there is a
chance that employees' expectations may not be met.
Conclusion
The concept of a strong, universal social security system
has never existed in India. The primary reason for this has
been the fact that India has been a developing country
with the world's second largest population to support.
As such, historically, governments have always relied on
individual savings and employer sponsored plans to meet
the retirement and social security needs of the population.
It is still early days for the NPS, and it remains to be seen
if this scheme can achieve the mass appeal and scale
within the retirement savings landscape that has been
achieved by the decades old Employees Provident Fund.
|