To make them realize the importance of Pension products, the tax benefits should go

Recently in February afte the budget, Supratim Banyopadhyay got appointed as PFRDA chairperson. Now, PFRDA is looking to regulate the pension schemes and on this, Mint took the interview of My Banyopadhyay where he told the changes he wants to make-

As the new chairperson, what would be your immediate priorities?

The first priority is to see that the proposed amendment to the Pension Fund Regulatory and Development Authority (PFRDA) Act that was announced in the Budget goes through smoothly (the budget proposed to separate NPS Trust from PFRDA. There is a view that a regulator managing funds can lead to conflict of interest). We have to do a lot of groundwork and be ready for the changes internally. The parliamentary process may take some time.

For this, we are working on the structure of the NPS Trust after its separation from PFRDA. Proposals have to go from us to the government. After that, there will be consultations with the government.

We have also proposed to the government to have uniform taxation in NPS, which we expected in the Budget. The 14% NPS contribution by the central government for its employees is tax-free. But it is 10% for state government employees and other individuals. We had proposed that the 14% contribution from the employer should be tax-free for all subscribers. The proposal did not get through in the budget, but we will be pursuing it with the government.

We also requested clarifications on other aspects of NPS taxation. For example, we have sought clarity on the taxation if a subscriber withdraws from his tier-II account.

There have been talks on introducing alternatives to the mandatory annuity that an NPS subscriber needs to buy with the 40% corpus on maturity. What are your plans?

At present, we are at a nascent stage. There are two ideas we are exploring. One, we are looking at whether the 40% corpus can remain within the system. Our fund managers will invest this corpus in the market and pay out the subscriber. The other option is to introduce some kind of systematic withdrawal plan. But we have to work out the final structure for these ideas.

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