Now pension product with assured return is being worked upon and shall be formulated this fiscal year, said the PFRDA chairman Supratim Bandyopadhyay. Until now as pension product you are being offered NPS or National Pension Scheme which is a market-linked product.
"(Offering such a product) is part of our Act and we will definitely do it. We are forming a committee and obtaining actuarial inputs to formulate such a product in the next six months. We will then seek a board approval and prepare for the launch," he said.
Nonetheless this guaranteed product shall include a distinct cost by the name of guaranteed charge. "The capital adequacy requirements for such a product will go up. Not only that, there will be a different charge structure too. Wherever there are guaranteed products, there is a guarantee charge," Bandyopadhyay explained.
Also for offering NPS with the SWP at the time of retirement, the official said that it will not come shortly. "But we are looking at it seriously and will ensure that it comes out at the earliest. We are taking feedback. It will not be like normal SWP that lasts 10-15 years. It has to last for 25-30 years...through his or her lifetime, given the longevity we are seeing," he said. Currently the proposal is under discussion with actuarial firm.
SWPs have been recently gaining traction for want of regular income as dividend income is uncertain and now that is even taxable in the hands of investors.
Also, while the cost on the product shall increase it shall not in any way close to what mutual funds attract. Furthermore, as another achievement, together the NPS and APY assets under management have now crossed Rs. 5 trillion.