PFRDA Chief Seeks Tax Support and Financial Literacy to Expand NPS Reach

Pension Fund Regulatory and Development Authority (PFRDA) Chairperson S Ramann has called for enhanced financial literacy and stronger tax incentives to expand the National Pension System (NPS) beyond government employees. 

Speaking at the Business Standard BFSI Insight Summit 2025 in Mumbai, he emphasised the need for digital outreach and inclusive education to boost pension participation across India.

PFRDA Pushes for Wider NPS Adoption

Ramann revealed that NPS has generated an average annual return of 9.2% over 15 years, yet around 75% of total NPS assets still come from government subscribers. To balance this, the target is to increase non-government NPS subscribers from 10 million to 250–300 million within the next 6 years. 

He said the expansion would rely heavily on digital platforms and awareness initiatives aimed at private-sector employees, self-employed individuals, and rural populations.

Financial Literacy: The Cornerstone of Growth

The PFRDA chief highlighted that financial literacy remains the biggest barrier to wider adoption of pension and insurance products. He suggested that institutions like the National Institute of Securities Markets (NISM) could introduce certification programmes to train local financial planners. 

He also proposed leveraging bank sakhis and self-help group members to educate people in rural areas. With India’s digital infrastructure and widespread mobile access, targeted financial education can significantly improve savings and investment awareness.

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Challenges in the New Tax Regime

Ramann expressed concern that the new tax regime has reduced NPS-related tax incentives, impacting investor participation. With nearly 70% of taxpayers now under the new regime, NPS has lost a key attraction. 

He noted that globally, pension systems are supported through mandates and tax incentives, often investing in infrastructure and startups—an approach India could consider adopting.

EPF and NPS: Coexistence and Competition

Discussing the Employees’ Provident Fund Organisation (EPFO), Ramann said both EPF and NPS serve different needs but can coexist. While EPF focuses on accumulation, NPS offers both accumulation and payout options. Allowing employees to choose between them could lead to healthy competition, improved returns, and better product innovation for savers.

Building India’s Pension Ecosystem

Looking ahead, Ramann emphasised the need for homegrown pension funds across tier-2 and tier-3 cities. By leveraging India’s advanced digital payment systems, the country can safely expand participation and mobilise domestic savings. 

He said the sector must first grow its base before aiming to match global pension giants like CalPERS and Ontario Teachers’ Pension Plan.

Conclusion

PFRDA’s roadmap focuses on three key pillars—financial literacy, tax support, and digital inclusion. With these, India could witness a massive expansion of NPS participation, driving long-term savings and retirement security across diverse economic segments.

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