The interim pension regulator is looking to rope in the 1.4-million strong army of Life Insurance Corporation agents to sell the low-cost variant of its flagship retirement plan, the New Pension Scheme, or NPS.
The NPS Lite is an NPS carve-up for the poor that has failed to attract many investors so far. The Lite version works on a ‘group’ model and, therefore, needs aggregators to bring individual subscribers together. Interim regulator Pension Fund Regulatory Development Authority, or PFRDA, oversees the NPS but needs the Insurance Regulatory Authority of India’s permission to engage the services of LIC agents.
“The modalities of roping in LIC are being worked out. It has around 14 lakh agents who can definitely help in promoting the new pension scheme,” said a government official familiar with the development.
Launched in 2003, the NPS has a total corpus 9924.72 crore and 23.56 lakh subscribers. NPS Lite accounts total 7.43 lakh.
“IRDA had not allowed insurance companies to be roped in as aggregators. That’s why we had LIC Housing Finance as an aggregator instead of LIC,” a PFRDA official told ET. “The government may now push IRDA to relax this clause.”
To provide a boost to NPS Lite, the government had also announced a co-contributory scheme, Swavlamban, during the last fiscal under which it contributes 1,000 to the NPS accounts of poor subscribers. So far, only 3 lakh subscribers have joined against a target of 1 million.
In a report released on Monday, the parliamentary standing committee on finance, headed by Yashwant Sinha, expressed concern over the low popularity of NPS-Lite and urged the government to make more efforts to popularise the scheme.
As of now, the NPS Lite has about 30 aggregators that include government and non-government organisations and also some microfinance institutions such as Bandhan.
“LIC Housing Finance had promised a great number of subscribers but all they could manage was around 90,000 accounts,” the PFRDA official said, adding that “small operators such as co-operatives which employ ground level workers can generate better numbers.”
However, some industry players said PFRDA’s norms for aggregators were very stringent, discouraging small players from entering the space.
Under the norms, an aggregator must have a net worth of 1 crore and the entity must have been in business of financial services or commodity development for at least three years.