NPS age limit raised to 65 years: Regulator

The Pension Fund Regulatory and Development Authority (PFRDA) on September 11 announced that the upper age limit for joining the National Pension Scheme (NPS) had been raised to 65 years, from the current 60.

Chairman of PFRDA, Hemant Contractor made the announcement at a conference, saying that the pension regulator's board had already approved the change and it would be notified shortly. "NPS is currently open for people between 18 and 60, and our Board has approved raising the age limit for joining to 65," Contractor said.

"The scheme anyway has the option of continuing and making contributions up to the age of 70," he added.

Explaining that the rationale behind government reforms in pensions is to facilitate "portability", or the transfer of superannuation funds by making the NPS more attractive and customer-friendly.

"The aim is to open up pensions to sectors that are without pensions," he said, noting that only 15 to 16 per cent of employees in India are covered by pensions, because an overwhelming 85 per cent of the workforce is found in the unorganised or "informal" sector.

Elaborating on the benefits of the NPS, Contractor said it is the "lowest cost pension product in the world today".

"Costs are important because even 1 per cent difference in cost, over 25 to 30 years, makes around 15 to 16 per cent difference at the end, because of the compounding factor."

"Our fund management charges are a minuscule at 0.01 per cent. It is the lowest when you compare what others are charging, which is about 0.4 or 0.5 per cent," he said, adding that the NPS returns compare with the "best in the industry".