Need for all pension products to come under a single regulator: Axis Bank MD

Mumbai: Axis Bank chief Amitabh Chaudhry has called for unifying various pension products under a single regulator given the fragmented landscape for pension products in the country.

Speaking at the launch of the Association of NPS (National Pension Scheme) Intermediaries, Chaudhry said that today, customers face a fragmented landscape with EPF, EPS, superannuation funds, and insurance mutual fund pension products making it challenging to make informed choices.

"A unified approach would enhance regulation and simplify decision making for customers."

Chaudhry said that NPS, by shifting from a defined benefit to a defined contribution model, has ensured long-term sustainability. “We moved from a defined benefit to a defined contribution pension system in India, which was very important for its long-term sustainability,” Chaudhry explained, noting how the scheme’s design—disintermediating every process—keeps costs low and transparent.

Despite its successes, Chaudhry pointed out that NPS faces challenges. He identified the mandatory entity purchase at exit as a barrier for many prospective subscribers. "The mandatory entity purchase at exit remains a bitter issue for many, discouraging them from opting for NPS," Chaudhry remarked.

In terms of opportunities, Chaudhry sees the formation of associations and greater involvement of smaller players in the pension market as crucial steps for the future. "The association will help in fostering trust, clearing routes, and providing necessary support to subscribers throughout their NPS journey,” he said. He also believes that proposed Unified Pension Scheme will be better positioned to compete with larger players in the market, given its design and the opportunities for smaller players.

The UPS scheme aims to provide a more secure and predictable retirement plan for government employees, combining features from both the Old Pension Scheme (OPS) and the National Pension Scheme (NPS).

“We are looking forward to the UPS being launched, as it will provide a unique opportunity for smaller players to work harder and gain an advantage over the larger players,” Chaudhry added.

Looking ahead, Chaudhry called for a unified regulatory approach to address these weaknesses. "We need to unify the various products addressing pension needs under a single regulator investment regime," he stated. He also advocated for giving employees the freedom to choose between EPFO and NPS, which would increase flexibility and allow workers to better align their investments with their goals.

"Salaried employees should have the freedom to choose between EPFO and NPS," Chaudhry said, emphasizing that flexibility is key to encouraging wider participation in the system.


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