SBI pension fund tops NPS collections for unorganised sector

SBI pension fund  tops NPS collections for unorganised sector

   With the revised DTC proposing that the final payouts be exempt from tax, the scheme for the unorganised sector is expected to gain popularity from next year.

   SBI Pension Fund topped in collections under the new pension scheme for the unorganised sector. According to the latest available figures, collections have crossed Rs 30 crore.

   The six designated fund managers for the NPS are ICICI Prudential, IDFC, Kotak Mahindra, Reliance Capital, SBI, and UTI. Of the six, SBI Pension Fund has received the highest amount of Rs 21 crore. Reliance has collected Rs 2.5 crore, UTI Rs 2.4 crore, ICICI Prudential Rs 2.2 crore, Kotak Mahindra Rs 1.3 crore and IDFC Rs 1.1 crore.

   The NPS for the unorganised sector has not really taken off since its inception. The two major hindrances have been the disadvantage on the taxation front and the lack of intermediaries to sell the product.

   Under the existing tax structure, the maturity proceeds under the NPS are taxed. That is, an EET (exempt-exempt-tax) method is followed. This puts the scheme at a disadvantage vis-a-vis other savings instruments where the exempt-exempt-exempt (EEE) method is followed.

   Now with the revised DTC proposing that the final payouts be exempt from tax, the scheme is expected to gain popularity from next year.

   It is learnt that the stakeholders have requested the new PFRDA Chairman to appoint intermediaries to sell the product to the masses.

NPS for Central  Government employees

   The total funds managed under this scheme amounts to Rs 4,590 crore. Of the three appointed fund managers, SBI manages Rs 2,141 crore, UTI has Rs 1,606 crore of funds and LIC PF the remaining Rs 843 crore.

   The fund is allotted on the basis of performance. This time LIC Pension Fund got the highest allocation. However, according to other pension funds, as investment in the pension corpus is long-term in nature, their performance should be assessed on the basis of cumulative annualised NAV return rather than the year-on-year annualised return considered by the NPS trust.According to them, since subscribers to the pension funds are long-term investors, cumulative NAV return is a better instrument for assessing the
performance.

NPS for State  Government employees

   Nine States are a part of the NPS, including Madhya Pradesh, Gujarat and Haryana, contributing Rs 489.31 crore to the scheme. Of the total funds, SBI manages around Rs 196 crore, UTI Rs 152 crore and LIC Rs 142 crore.