PFRDA Mobile Pension Accounts: PFRDA is working on a new digital pension system that could make it easier for informal workers to start saving for retirement. The plan may let workers open pension accounts using their mobile phones and add money through UPI.
Mobile Pension Accounts for Informal Workers
The Pension Fund Regulatory and Development Authority (PFRDA) is looking at ways to bring more workers from the informal sector into formal pension savings. Many such workers don’t have a fixed monthly salary and may not regularly pay income tax.
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PFRDA chairperson Sivasubramanian Ramann said the regulator is studying a mobile-based system linked with the government’s e-Shram database. The idea is to use details that workers have already given to the government so that opening an account becomes faster and needs less paperwork.
“We are, therefore, looking at how people, who are already registered on the database, can be enabled to open pension accounts through a simple, few-click process on their mobile phones,” he was quoted as saying by PTI.
The possible process can work in a simple way:
- A worker registered on e-Shram could use the existing details to start the pension account process.
- The account could be opened through a few steps on a mobile phone.
- After opening the account, money could be added through UPI.
PFRDA is also considering making the service available in several Indian languages. This could help workers who find formal financial products difficult to understand.
PFRDA has already introduced NPS Tatkal for pension transactions through UPI providers. The new idea could take that digital approach further and make pension access easier for informal workers.
Guaranteed-return pension product also in works
PFRDA is also developing a guaranteed-return pension product for people outside the government sector. The regulator has a mandate under its law to work on such a scheme and has formed an expert committee to study how it could be designed.
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“We have to work on a guaranteed-return scheme because there is a mandate under our Act,” Ramann said, adding that an expert committee has been constituted to examine possible products.
One major question is who will provide the guarantee. The proposed product for non-government subscribers won’t have the same built-in guarantee structure as the Unified Pension Scheme (UPS) for government employees.
PFRDA is also looking at innovative bond issues that could help pension funds provide inflation-protected outcomes.
NPS Swasthya and more Pension Funds
Another product being prepared is NPS Swasthya. It is expected to let subscribers use part of their pension savings for hospitalisation expenses. A linked top-up insurance cover could then pay for the remaining amount. The top-up cover may be around eight to ten times the initial contribution. A pilot has already been carried out with two pension funds. PFRDA expects other pension funds to offer it through insurance company tie-ups too.
PFRDA is also expanding the pension fund network. Four new pension funds have been added to the earlier 10, taking the total to 14. Bank of Baroda has also received in-principle approval to set up a pension fund.
“We have already mentioned this. Bank of Baroda has submitted its application, and in-principle approval has been provided. They should now be in the process of setting up the pension fund. We have four new pension funds in addition to the existing ten pension funds,” the executive said.
