The year 2017 saw some important developments in the pension sector, which is dominated in India by the Employees’ Provident Fund (EPF) and the National Pension System (NPS). As any development in the sector impacts the savings of millions of individuals, even a minor change goes through many deliberations, and could take time. The developments in withdrawal rules, taxability and ease of operation, in 2017, too were incremental in nature. Similarly, no single big bang change is expected in 2018. The changes expected are largely in terms of fine-tuning of the existing processes to improve ease of operating and increase the returns for those investing their savings in these products.

“I don’t see too much disruption in 2018 but I do wish that the seemingly disjointed approach to the future policy of long-term financial security and social security is better aligned,” said Kulin Patel, head of retirement, South Asia, Willis Towers Watson.

For NPS, there are plans to offer ‘auto enrolment’—like in other countries—and increase the equity exposure for government employees, from the current levels of 15% to be on par with private sector, where it can go up to 75%, said Sandeep Shrikhande, chief executive officer, Kotak Pension Fund. “The biggest concern in NPS today is licensing of pension fund managers for the private sector. The last RFP (request for proposal) floated by the PFRDA (Pension Fund Regulatory and Development Authority) has lapsed due to technical reasons and a new RFP is eagerly awaited. Last time, the pension fund managers (PFMs) were permitted to quote higher fees, up to 10 basis points, against current fee of 1 basis point, which could not be implemented due to lapse in RFP,” said Shrikhande. One basis point is one-tenth of a percentage.

Read more @LiveMint