PENSION BULLETIN VOLUME IV ISSUE IX

Transcription

1 PENSION BULLETIN VOLUME IV ISSUE IX Pension Fund Regulatory and Development Authority1st Floor, ICADR Building, Plot No.6 Vasant Kunj Institutional Area, Phase-II, New Delhi , Ph.: , Fax: , Website:

2 INDEX 1. A note on pension adequacy and benchmark portfolio for pension funds 2 2. Conferences held during the month Circulars and public notices issued Induction of second CRA under NPS Press Releases NPS Statistics Macroeconomic Statistics Major news clippings on pension market 30 1

3 1. A Note on Pension Adequacy and Benchmark Portfolio for Pension Funds Section I As the world continues to grapple with the social and economic effects of population aging, the provision of financial security in retirement becomes increasingly critical. Pensions constitute the main element of income in old age. Therefore, coverage, adequacy and sustainability of the pension system to provide old age income security to the citizen becomes very vital. In this paper adequacy of pension is being addressed. Adequacy of pension is primarily measured by their ability to prevent poverty, to replace the earnings people had before retiring and to ensure a living standard on par with younger age groups. Inadequate retirement savings leads to lower living standards in retirement and the increasing incidence of poverty among the elderly. In general terms, adequacy implies that people in retirement should enjoy a living standard that is comparable to the one they experienced during their working lives. The ability of pension systems to protect living standards at the point of transition from work to retirement can be assessed by comparing pension incomes to the earnings of people below pensionable age. An individual s replacement rate is simply the fraction of his/her preretirement income replaced by retirement income: Replacement rate = Retirement Income / pre-retirement income In order to assess adequacy further, four alternative sets of replacement rates are calculated. Gross Replacement Rate: The gross replacement rate is expressed as the ratio of the pension over the final earnings before retirement. Net Replacement Rate: The net replacement rate is defined as the individual net pension entitlement divided by net preretirement earnings, taking account of personal income taxes and social security contributions paid by workers and pensioners. The personal tax system plays an important role in old-age support. Pensioners often do not pay social security contributions and, as personal income taxes are progressive and pension entitlements are usually lower than earnings before retirement, the average tax rate on pension income is typically less than the tax rate on earned income. In addition, most income tax systems give preferential treatment either to pension incomes or to pensioners, by giving additional allowances or credits to older people. Therefore, net replacement rates are usually higher than gross replacement rates. Gross Pension Wealth: Pension wealth shows the size of the lump sum that would be needed to buy a flow of pension payments equivalent to that promised by the mandatory pension system in each economy. Pension wealth is measured and expressed as a multiple of gross annual individual earnings. Net Pension Wealth: Net pension wealth shows the size of the lump sum that would be needed to buy the flow of pension payments, net of personal income taxes and social security contributions, promised by the mandatory pension system in each economy. It is measured and expressed as a multiple of gross annual individual earnings in the respective economy. Gross earnings are used as the comparator to isolate the effects of taxes and contributions paid in 2

4 retirement from those paid when working. This means that gross and net pension wealth are the same where people are not liable for contributions and income taxes on their pensions. To meet the pension wealth/replacement rates as indicated above, a proper approach to pension design, including for DC schemes is required. Therefore instead of targeting for short term return on pension investment, calculating back from a desired/required pension level and setting a contribution rate, investment horizon, investment return target and consequent long term investment strategy adequate to reach this goal is required. Given, say, a 50% replacement rate target at the age of 60 and a contribution rate of 10%, one needs to calculate expected annuity prices based on mortality data and estimates about improvements, and then use asset return and wage curve modeling to see what sort of investment performance and portfolio may be necessary to reach the pension capital required. It may turn out that the set of replacement rate / retirement age /contribution rate does not allow for a realistic investment performance, in which case one or more of those parameters may have to be adjusted - though some of these decisions, such as the contribution rate, may well be outside the control of the supervisory authority (e.g. in mandatory systems where they are set in legislation). This approach is fundamentally different from the standard one of contributions are defined and benefits will be as much as investment strategies succeed in delivering. From day one a long term investment strategy and portfolio must be utilized, whose only objective is to lead to adequate pensions. In order to build these benchmark portfolios, there needs to establish the target objective i.e. target replacement rate for the pension funds. A target replacement rate for average individuals is usually in the 50-70% range. For reference, the average replacement rate from mandatory pensions is the OECD is 55%, while the International Labor Organisation (ILO) recommends a minimum 40% replacement rate from the public pension systems. Given this target replacement rate and the level of contributions into the fund, a target return can be set (assuming these inputs are internally consistent). A benchmark portfolio can then be established with the maximum probability of achieving the desired return with the minimum amount of risk, based on the projected returns, volatility and correlations of various asset classes. This benchmark portfolio should be low cost, allow for adequate diversification and based on passive index investments. The second Section II of this note gives an overview of the replacement rates and pension wealth in various economies (includes both public and private pension). 3

5 Sec-II Replacement rates and Pension Wealth in OECD and Asian Countries (Source: OECD) Gross Replacement Rate For workers at average earnings, the average for the OECD countries of the gross replacement rate from mandatory pensions is 54.4% for men and 53.7% for women. There is little variation across Asia-Pacific OECD economies, with Australia at the top of the range, offering replacement rates of 52.3% and Japan at the bottom with only 35.6%. The rates for the non OECD economies do have a wide range, going from 78% for China to 14% for Indonesia, though the next lowest are Hong Kong and Malaysia at 35%. Regional variation also exists with Pakistan having a replacement rate approximately one-half higher than Sri Lanka, whilst the majority of the remaining Asia-Pacific economies have replacement rates between 35% and 55%. The non-asian OECD economies normally have lower replacement rates with Italy and, to a lesser degree, France being slight exceptions with replacement rates of 71% and 59% respectively. Gross pension replacement rates by earnings, men and women Men Women Individual earnings (% average) East Asia/Pacific China Hong Kong Indonesia Malaysia Philippines Singapore Thailand Vietnam South Asia India Pakistan Sri Lanka OECD Asia-Pacific Australia Canada Japan Korea New Zealand United States Other G7 France Germany Italy United Kingdom OECD

6 Low earners workers earning only half the mean have higher replacement rates than mean earners: on average, 71% for the OECD. This reflects the fact that most economies attempt to protect low income workers from old-age poverty. The cross economy variation of replacement rates at this earnings level is much higher than it is for pensions of those who earn twice the average. The highest gross replacement rates for low earners are found in China at 98%, which means that full-career workers with permanently low earnings have approximately the same income, upon retirement, as when they were working. The lowest rate is again observed in Indonesia, which has a replacement rate of 14% for low earners. Australia has the highest replacement rate amongst Asian OECD economies at 91%, more than twice that of Germany. For high earners working earning twice the mean China again offers the highest pensions, with a replacement rate of 68%, closely followed by Viet Nam which has a steady replacement rate of 67% across all the earnings levels. The variation across economies in replacement rates for high earners is much smaller than it is for people on low or average pay. Indonesia is again at the bottom of the rankings though it is followed by the United Kingdom, New Zealand, Singapore and Korea all with replacement rates less than 22%. Again the majority of the nonoecd economies have higher replacement rates than their OECD counterparts, with the exception of Italy. Five of the eleven non-oecd economies have a higher replacement rate than the OECD average of 43.6%, compared to only one of the ten OECD countries listed. The replacement rates in Australia and Korea are approximately half the level for low earners for Australia and well below half in Korea. For Canada and the United Kingdom the replacement rates are at one-third of the level for low earners, while for New Zealand they are only at onequarter of the level. For women the replacement rates are below, or at best equal to, those for men, without exception. Whilst most OECD countries have the same replacement rates for men and women it is noticeable that all the non-oecd economies, apart from Thailand and the Philippines, have lower replacement rates for women than for men. The majority of non-oecd economies are now actually below the OECD average across all the earnings levels, which is the opposite of the findings for men. This is particularly the case for low earners where nine of the eleven non- OECD economies listed are below the OECD average, with the exceptions being China and India. The gaps are the consequences of gender differences in employment, i.e. in pay, working hours and duration of working life. Some pension systems are designed in such a way that these differences in life-time employment and earnings are not fully mirrored in pension outcomes. A lower gender pension gap may result over the long term from more equal opportunities in employment for women and men, but pension system features such as care leaves or survivors' benefits will continue to play an important role in closing the gap. 5

7 Gross replacement rates by earnings, low and average earners 50% average earners Indonesia Hong Kong Malaysia Singapore Germany Sri Lanka Thailand Philippines United States Japan United Kingdom Korea France Vietnam OECD34 Italy India Pakistan Canada New Zealand Australia China Source: OECD pension models. OECD South Asia East Asia/ Pacific % Average (mean) earners Indonesia United Kingdom Hong Kong Malaysia Japan Philippines United States Singapore Korea New Zealand Germany Canada Sri Lanka Thailand Australia OECD34 India France Pakistan Vietnam Italy China OECD South Asia East Asia/ Pacific % Net Replacement Rates For average earners, the net replacement rate across OECD countries is 65.8% for men and 65.0% for women, which is 11% higher than for gross replacement rates. Three of the non- OECD economies are higher than this average for men, whereas out of the OECD countries listed Australia, France and Italy all have values higher than the average. Replacement rates within Asia are similar across the different geographical regions and also between OECD and non OECD economies. Only Australia and Canada have replacement rates that are greater than that of most of the non-oecd economies, with China, Viet Nam and Pakistan being the exceptions. Low earners workers earning only half the mean have higher replacement rates than average earners: on average, 81.7% for the OECD. This reflects the fact that most countries attempt to protect low income workers from old-age poverty. The cross economy variation of replacement rates at this earnings level is much lower within the OECD than for the Asian economies. The highest net replacement rate for low earners is found in China at 106.4%, which means that full-career workers with permanently low earnings have more money when they retire than when they were working. Australia also has a replacement rate at this earnings level that is just above full replacement, at 100.5%. The lowest rates are again observed in Indonesia where full-career workers on half average earnings have only a 14% replacement rate. The replacement rates in Hong Kong, Malaysia, Singapore and Thailand are marginally lower at this earnings level when compared to average earners. For high earners workers 6

8 earning twice the mean the OECD average drops to 54.6%, with all OECD countries, with the exception of Italy, having lower replacement rates at this earnings level than at average or 50% average earnings. For Asia the same trend applies with Malaysia and Sri Lanka being the exceptions, and in fact the replacement rate in Malaysia at this earnings level is the third highest for all the East Asia/Pacific economies, just behind China and Viet Nam. The lowest replacement rate is again found in Indonesia. The gap to the other economies has narrowed compared to other earnings levels, with Hong Kong now having a rate just over double that of Indonesia. On comparison with the 50% average earnings figure, the replacement rate for Singapore is just over half at 23.8% and that for New Zealand is less than one-third of its earlier level, with both Canada and the United Kingdom at just over one-third. For women the net replacement rates are at best equal to those for men, but are generally lower, and this is the case for all the economies listed. The rates in the Philippines and Thailand are identical to those of men, whereas in Sri Lanka the replacement rates for women are less than two-thirds those for men across all the earnings levels. This lower level in Sri Lanka is mainly due to the lower retirement age for women than men. Net pension replacement rates by earnings, men and women Men Women Individual earnings (% average) East Asia/Pacific China Hong Kong Indonesia Malaysia Philippines Singapore Thailand Vietnam South Asia India Pakistan Sri Lanka OECD Asia-Pacific Australia Canada Japan Korea New Zealand United States Other G7 France Germany Italy United Kingdom OECD

9 Net replacement rates by earnings, low and average earners Indonesia Hong Kong Malaysia Singapore Thailand Sri Lanka Japan Germany Philippines United States Korea United Kingdom Vietnam France Pakistan OECD34 New Zealand Italy India Canada Australia China 50% average earners OECD South Asia East Asia/ Pacific % Indonesia Hong Kong Japan Malaysia United Kingdom Singapore New Zealand Korea Philippines United States Thailand Sri Lanka Germany Canada India OECD34 Pakistan Australia Vietnam France Italy China Average (mean) earners OECD South Asia East Asia/ Pacific % Source: OECD pension models. Pension Wealth For a fuller picture about pension wealth consideration needs to be given to both retirement ages and life expectancy variation across economies. For example, the general retirement age within OECD countries is 65, whereas for the non-oecd economies it is generally either 55 or 60 for men. Whilst it is shown later that the life expectancy levels in nonoecd economies are lower than for OECD countries the actual duration of retirement is longer in the nonoecd economies for those who reach retirement age. The average pension wealth for the OECD is 9.3 for average earners, 12.3 for 50% average earners and 7.4 for 200% average earners. The other OECD economies are generally below these averages apart from Italy at the 100% and 200% earnings levels. For the Asian/Pacific OECD economies they are all lower than the OECD average at all earnings levels, with the exception of Australia and New Zealand at the low earners level. For the non-oecd economies China, India and Viet Nam are higher at all earnings levels, with Sri Lanka also having a higher pension wealth at 200% average earnings. China has the highest pension wealth of all for each of the earnings levels, with the exception of the 200% level where Viet Nam is slightly higher. The lowest pension wealth figures are found in Indonesia, which has a constant rate of 2.6 for all earnings levels. The value for China is over seven times that of Indonesia for men with lifetime earnings equivalent to 50% average within their economy. 8

10 The level of pension wealth either remains steady or declines as the level of earnings increases in all the other economies. In China for 200% average earners the level of pension wealth is approximately two-thirds that for 50% average earners. The same applies in the Philippines, Singapore, Thailand, India, Japan, Korea and the United States, though in all cases the actual lump-sum value for 200% average earners is at least double. For example the lump sum in China for 50% average earners is 19.1 * 0.5 = 9.6 times average earnings, compared to 13.3 * 2.0 = 26.6 times average earnings for those at the 200% earnings level. For New Zealand the pension wealth at 200% average earnings is half that for average earnings, which in turn is half that for 50% average earnings. This is expected as the mandatory pension in New Zealand is not dependent on earnings and so for all earnings levels the pension wealth is worth 8.8 times individual earnings for men and 9.9 individual earnings for women. The difference between sexes is due to the difference in life expectancies. There is limited regional variation with South Asia being relatively consistent with all three countries having virtually identical values at average earnings levels with India higher for low and Sri Lanka for high earners. As mentioned earlier the levels of pension wealth for women are generally higher than those for men. Only Sri Lanka has higher levels for men than women, though the levels are identical for Indonesia, Malaysia and Singapore across all earnings levels. The variation for women is also greater than that for men, ranging from 20.0 in China for 50% average earnings to 2.6 in Indonesia for all earners. The rate of decline in pension wealth as earnings increase is virtually identical between the sexes for all the economies included. Gross pension wealth by earnings, men and women Men Women Individual earnings (% average) East Asia/Pacific China Hong Kong Indonesia Malaysia Philippines Singapore Thailand Vietnam South Asia India Pakistan Sri Lanka OECD Asia-Pacific Australia Canada Japan Korea New Zealand United States

11 Other G7 France Germany Italy United Kingdom OECD Gross pension wealth by earnings, low and average earners Indonesia 50% average earners Philippines Hong Kong Singapore United States Malaysia Germany United Kingdom Japan Sri Lanka Thailand France Korea Pakistan Italy OECD34 India Canada Vietnam Australia New Zealand China OECD South Asia East Asia/ Pacific % Indonesia Average (mean) earners Philippines United Kingdom United States Hong Kong Japan Singapore Korea Canada Malaysia Germany New Zealand Sri Lanka OECD34 Australia India Pakistan France Thailand Italy Vietnam China OECD South Asia East Asia/ Pacific % Source: OECD pension models. Net Pension Wealth: For average earners net pension wealth is identical to that of gross pension wealth in only two OECD countries, namely Australia and Canada, which have identical values of pension wealth, net and gross, for each of the earnings levels. The same is not the case for the non-oecd economies as the majority here have identical pension wealth, net and gross. For average earners there are no economies with different values. In fact no matter which level of earnings is chosen, there is only one non-oecd economy that has a different value for net and gross pension wealth, namely China for high earners. The average for the OECD countries is 11.4 for low earners, 8.7 for average earners and 6.6 for high earners. Australia and Italy have a higher value for average earners, with only Italy having a higher value at the 200% earnings level, and Australia, Canada and New Zealand have higher values at 50% average earnings. As with the gross pension wealth the values for New Zealand half on each doubling of earnings as the mandatory pension is not affected by earnings but rather residency rules. For high earners the non-oecd Asian economies dominate with China, Malaysia, Viet Nam, India and Sri Lanka having values above the OECD average, with none of the Asian 10

12 OECD countries having a higher value than the OECD average. The values in both China and Viet Nam are approximately twice that of the OECD average. Even the variation within the other OECD countries is apparent with Italy having a net pension wealth over three times that of the United Kingdom for high earners. For low earners China, Viet Nam and India all have a net pension wealth higher than the OECD average. The value in China at 19.1 is over seven times the value in Indonesia. For the OECD it is only three of the six Asia-Pacific economies, namely Australia, Canada and New Zealand that have a net pension wealth above the OECD average. The remaining OECD countries all have similar values between 7.4 and 10.9, but all are below the 11.4 OECD average. For women the same pattern is repeated as for the gross pension wealth, in that only Sri Lanka has higher net pension wealth figures for men than women, with Indonesia, Malaysia and Singapore again being identical for both sexes. The remaining economies, both OECD and non-oecd all have net pension wealth estimates that are higher for women than for men. Net pension wealth by earnings, men and women Multiple of individual annual gross earnings Men Women Individual earnings (% average) East Asia/Pacific China Hong Kong Indonesia Malaysia Philippines Singapore Thailand Vietnam South Asia India Pakistan Sri Lanka OECD Asia-Pacific Australia Canada Japan Korea New Zealand United States Other G7 France Germany Italy United Kingdom OECD

13 2. Conference on implementation of Atal Pension Yojana (APY) A conference on implementation of Atal Pension Yojana (APY) was organized by PFRDA on 20 th November 2015 at New Delhi. The prime objective of the conference was to sensitize the Banks and Post offices to increase the coverage of Atal Pension Yojana (APY) amongst the masses and give a fillip to the goal of providing old age income security to unorganized sector by increasing the pace of registration of all hitherto uncovered subscribers into APY. Senior officials of all Public Sector Banks, Regional Rural Banks, Private Sector Banks and Department of Post had participated in the conference. 3. CIRCULARS AND PUBLIC NOTICES ISSUED a. Circular No. PFRDA/2015/24/EXITS/1 dated 29 th October, 2015 on Deferred withdrawal of lumpsum is issued. Details of the same are available on b. Circular No. PFRDA/2015/27/EXITS/2 dated 12 th November, 2015 on Mandatory processing of online withdrawal request is issued. Details of the same are available on 4. INDUCTION OF SECOND CRA UNDER NPS Under NPS, a CRA acts as an operational interface between PFRDA and NPS intermediaries such as pension fund managers, annuity service providers and trustee bank. There has been substantial growth in the subscriber base across all sectors. While there has been reduction of charges from time to time, technological advancements and steady increase in subscriber base over the years has the potential to further improve service quality and reduce charges. It is felt that competitive pressure will lead to innovation leading to cost reduction and improvement in service quality. In light of the above, the Second CRA is being brought in to bring more competition both qualitatively and quantitatively in terms of cost to subscriber. With the introduction of second CRA, the Authority expects that there will be improvement in quality of service and cost of service may also come down. A request for proposals (RFP) have been invited for selection of second CRA and the interested entities may participate in the bidding process and submit their bid by The functions and responsibilities and the minimum qualifying criteria of the CRA under NPS would be as per the PFRDA (Central Recordkeeping Agency) Regulations, 2015 and RFP. The applicant shall be a company formed and registered under the Companies Act, 1956 (1 of 1956) or under any other central enactment, and registered with the service tax authority and operating for the last five years in the country and should have minimum Tangible net worth of Rs.100 crores as on the last day of the preceding financial year, and the applicant 12

14 should have demonstrated experience in developing and managing technology based central administration and recordkeeping system The details of qualitfication criteria, terms and conditions are given on the PFRDA s website 5. PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY - PRESS RELEASES a. National Pension System (NPS) Awareness Programme and Meeting with DCCBs Mumbai, Maharashtra NPS awareness programme was conducted on 06 th November, 2015 in coordination with Govt. of Maharashtra by PFRDA. Senior State Govt. officials from Finance & Accounts department Urban, Rural, Local Bodies, aided institutions funded by Govt of Maharashtra participated in the meeting. Representation of PFRDA and CRA briefed about the contours of Old Age Income Security, salient features of NPS and APY and the process of joining the schemes and advised all the participating SABs to onboard the NPS for their employees. Principal Secretary, Finance urged all the employees of these departments, Zilla Parishad, Urban, Rural and Local Bodies to join NPS. NPS awareness programme at Mumbai DCCBs strategy meeting at Mumbai A strategy meeting cum workshop on APY for DCCBs was conducted on 05th November, 2015 by PFRDA in coordination with NABARD at Mumbai, specifically for Maharashtra based DCCBs on Atal Pension Yojana. The objective of the meeting was to popularize APY in the State through these banks and extend the coverage of pension to the last mile. In this meeting, Shri A.G.Das, CGM, PFRDA briefed about the pension scenario in the world and need of pension in India, and advised all the participating banks to play an active part in outreach of the scheme. Dr U S Saha, CGM, NABARD, Mumbai highlighted the importance of 13

15 adopting APY by the RRBs & DCCBs of Maharashtra and elaborated various facets of financial inclusion. The scheme provides minimum guaranteed monthly pension to subscribers from Rs 1000 to Rs 5000 at the age of 60 years. During accumulation phase, GoI co-contributes 50% of the total contribution subject to a maximum of Rs 1,000/- per annum, for a period of five years to eligible subscribers if one registers before 31st December All Indian Citizens in the age group of years are eligible to join the scheme through the bank branch where one has SB account. As on Nov 06, 2015, the scheme has been subscribed by nearly 9.5 lacs subscribers. b. Conference on implementation of Atal Pension Yojana (APY) A conference on implementation of Atal Pension Yojana (APY) was organized by PFRDA on 20th November 2015 at New Delhi. The prime objective of the conference was to sensitize the Banks and Post offices to increase the coverage of Atal Pension Yojana (APY) amongst the masses and give a fillip to the goal of providing old age income security to unorganized sector by increasing the pace of registration of all hitherto uncovered subscribers into APY. Senior officials of all Public Sector Banks, Regional Rural Banks, Private Sector Banks and Department of Post had participated in the conference. Dr B S Bhandari, Member (Economics), PFRDA, in his welcome address informed that an ambitious target of 2 crores APY accounts has been set to be achieved by 31st December The target is achievable considering the fact that our country has around 40 crores citizens in the age group of years in the unorganised sector, who are to be covered under APY scheme. Banks were asked to conduct all India APY campaign day on 05th November 2015 which has resulted registration of more than 1 lakh subscribers. More such campaigns have been planned in the months of November and December He emphasized that the Banks and India Post should activate all branches and ensure periodical monitoring by the Nodal Officers of the Banks and Post office. Ms Anjuly Chib Duggal, Secretary, (FS) highlighted the need to have a pension scheme for the increasing elderly people in India which involves savings during the earning years as these savings would be available for development of economy and also provide old age income security without causing strain to exchequer. She stressed on the importance of Block Panchayats, districts and State level coordination committees in the implementation of social schemes and imparting financial literacy through 14

16 Children, students, young adults who could act as natural subscribers and need to link the skill centres with the State level Bankers Committee / State Governments. Department of Post through its 900 CBS branches would also facilitate subscriber registration under APY. She emphasized the Banks to step up their effort in increasing numbers under APY. Shri Hemant Contractor, Chairman, PFRDA, in the keynote address, gave an overview of the pension system across the world, the growing old age population and the concerns of old age security keeping in the view the increasing longevity and the strain on public exchequer. Hence, there is need for schemes which involve contributions/savings for the later years. He also added in India, around 88% of the working population-work force in the informal sector who are not covered under any formal pension schemes. Moreover, 10% of the senior citizen population in the world resides in India and this number would increase from current 100 million to 180 million by APY is a suitable low cost, low contributions pension scheme launched by GOI specifically targeted for the informal and unorganised sector and has many benefits for the subscribers. He stressed upon Banks to increase the number of subscriber registrations, arrange for staff training, ensure participation of each and every Bank branch and requested to proactively take initiatives in assisting migration of NPS-Lite / Swavalamban subscribers to APY and taking the scheme forward to the needy sections of the society. Currently, NPS has more than 1 crore subscribers with total Asset Under Management (AUM) of more than Rs.1 Lakh crores. Total no. of APY accounts opened has crossed 10 lakhs marks. He mentioned that the Triple benefits under APY, namely pension to subscriber, pension to spouse after subscriber s death and return of corpus to nominee after death of both subscriber and spouse, should appeal strongly to people and asked Banks and post offices to emphasize on this. Further as Government co-contribution under APY would be available only to those subscribers who joins by 31st December 2015, there is an urgency to opening of APY accounts. 15

17 6. NPS STATISTICS I. NPS-Growth of subscribers and Asset under Management for November, 2015 II. Share of different sectors in NPS as on 28 th November,2015 w.r.t. to subscribers, corpus and AUM. III. Overall Status of State Governments as on 28 th November, 2015 IV. Summary of UoS Sector in NPS as on 28 th November, 2015 V. Summary of Corporate Sector in NPS as on 28 th November, 2015 VI. NPS - Lite statistics as on 28 th November, 2015 VII. Atal Pension Scheme statistics as on 28 th November, 2015 VIII. PFM wise Returns on NPS Schemes (as on 30th November 2015) a. One year return (in %) b. Returns since inception (in %) IX. Year on year growth in the subscribers across all sectors(%) X. Year on year growth in AUM across all sectors(%) XI. Gender Wise Distribution in NPS as on 30 November, 2015 XII. Age Wise Classification of subscribers as on 30 November,

18 i. NPS-Growth of subscribers and Asset under Management for November, 2015 The number of subscribers under NPS increased by 0.43% during the month of November, 2015 supported by 2.74 % growth in unorganised sector and 1.34 % growth in corporate sector. The AUM under NPS increased by 1.81 % during the month of November, The highest growth in AUM is witnessed in Corporate sector followed by Unorganized sector. The subscriber base of newly launched Atal Pension Yojana has increased by % during November 2015 and AUM under APY have increased by 28.75%. The table depicting the same is as under: Number of Subscriber Number of Subscriber % Growth Over the month Assets Under Management Assets Under Management % Growth Over the month Sector as on 31 as on 28 as on 31 as on 28 Oct'15 Nov'15 Oct'15 Nov'15 (Rs. cr) (Rs. cr) Central Government 1,580,705 15,89, ,244 43, State Government 2,795,304 28,18, ,454 50, Corporate 426,223 4,31, ,558 7, UoS 110,382 1,13, NPS Lite* 4,467,560 44,67, ,883 1, Total 9,380,174 94,20, , * Fresh/new registration under NPS Lite has been stopped w.e.f. 01 st April 2015 Number of Subscriber Number of Subscriber % Growth Over the month Assets Under Management Assets Under Management % Growth Over the month Sector as on 31 as on 28 as on 31 as on 28 Oct'15 Nov'15 Oct'15 Nov'15 (Rs. Cr) (Rs. Cr) Atal Pension Yojana 836,674 1,131,

19 ii. Share of different sectors in NPS Percent share of Government subscribers in NPS is 41.8 %. However, share of private sector, NPS Lite and APY subscribers in total NPS is 5.2 %, 42.3 % and 10.7%, respectively. The AUM of Government sector is 89.9 % against which the share of private sector, NPS Lite and APY is 8.1%, 1.8% and 0.2%, respectively. Sector wise share of subscribers, corpus and AUM are given in the following table: (as on ) Sector Share of Subscribers (% ) Share of Corpus (% ) Share of Assets Under Management (%) Central Government State Government Total Corporate UoS Total NPS Lite* APY Total Grand Total

20 Distribution of Subscribers as on 28th November, 2015 (% ) APY 11% Central Government 15% NPS Lite* 42% State Government 27% UoS 1% Corporate 4% Distribution of Corpus across sector as on 28th November, 2015 (% ) Corporate 8% UoS NPS Lite* 1% 2% APY 0% State Government 50% Central Government 39% 19

21 Assets Under Management across all sectors as on 28th November, 2015 (%) Corporate 7% UoS 1% State Government 48% NPS Lite* 2% APY 0% Central Government 42% iii. Overall Status of State Governments 26 States have joined NPS. As on 28 th November, 2015, Uttar Pradesh has the highest number of subscribers enrolled under NPS followed by Madhya Pradesh and Chhattisgarh. In terms of assets under management (AUM), Rajasthan has the highest AUM of Rs crore followed by Maharashtra and Karnataka. Tamil Nadu has already notified NPS but is yet to adopt NPS architecture. Employees and employers NPS contributions are retained by the State Government instead of passing on to the NPS architecture for management by professional fund managers as per the investment guidelines prescribed by the Pension Fund Regulatory and Development Authority. West Bengal and Tripura are yet to notify NPS. State wise position of date of adopting the NPS, number of subscribers, corpus and the Assets under Management are given in the following table: # State Govt. Date of Notificati on Total No. of Subscriber Total Contribution (Cr) (As on 28 th November, 2015) AUM (Cr) 1. Andhra Pradesh Arunachal Pradesh Assam Bihar Chandigarh** Chhattisgarh Goa Gujarat Haryana Himachal Pradesh J & K

22 12. Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Manipur Meghalaya Mizoram Nagaland Orissa Puduchery** Punjab Rajasthan Sikkim Telangana Utarakhand Uttar Pradesh Tamil Nadu Tripura* No West Bengal* No Total 29 28,18,749 42, ,452.9 * Executed agreement with CRA and NPS trust only for AIS officer. ** Chandigarh and Puducherry status is included under the state government Status. *** IRA compliance in State Government is 89.78%. iv. Summary of UoS Sector in NPS 65 PoPs with 40,374 service providers are registered with PFRDA to provide services to citizens under the NPS. While the registration and contribution upload of Government and Government bodies employees is done by their respective Pay & Account offices, the private and the unorganised sector employees are serviced through the PoPs. As on November 28, 2015, 1,15,884 subscribers have been registered under the private and unorganised sector other than the NPS Lite and APY. The contribution from unorganised sector as on 28 th November 2015 was Rs crore against which AUM of the sector was Rs crore. Number of subscribers registered under NPS Tier II are 27,525. The contribution received from Tier II subscriber is Rs crore and the AUM is Rs crore. 21

23 (As on 28 th November, 2015) a) Number of registered PoPs 65 b) Number of registered PoP-SP 40,374 Tier I c) Number of subscribers 1,15,884 d) Amount of subscribers contribution Rs Crores e) Asset Under Management Rs Crores Tier II f) Number of subscribers 27,525 g) Amount of subscribers contribution Rs Crores h) Asset Under Management Rs Crores v. Summary of Corporate Sector in NPS 2,070 Corporates with 4,31,929 subscribers are registered under NPS. The contribution received from the corporate subscribers as on 28 th November, 2015 was Rs Crore against which the AUM was Rs Crore. (As on 28 th November, 2015) a) Number of corporate registered in NPS 2070 b) Number of subscribers registered 4,31,929 c) Amount of subscribers Contribution Rs. 6, Crores d) Asset Under Management Rs. 7, Crores vi. NPS - Lite statistics Under NPS-Lite, 63 aggregators are registered having a base of lakh subscribers. Total AUM of NPS Lite subscribers as on November 28, 2015 was Rs crores. (As on 28 th November, 2015) a) Number of Aggregators 63 b) Number of subscribers registered 44.67Lakhs c) Asset Under Management Rs. 1, Crores 22

24 vii. Atal Pension Scheme statistics The subscriber base of newly launched Atal Pension Yojana has reached to lakh as on November 28,2015 and AUM under APY have reached to Rs.191 crore. (As on 28 th November, 2015) a) Number of Banks registered under APY 342 b) Number of subscribers registered 11,31,633 c) Asset Under Management Rs Crores viii. PFM wise Returns on NPS Schemes 1.One year return (in %) Pension Funds SBI UTI LIC KOTAK Schemes CG SG Corporate-CG TIER I TIER II (as on 30 th November 2015) RELIAN CE ICICI HDFC E C G E C G NPS Swavalamban Returns since inception (in %) (as on 30 th November 2015) Pension Funds SBI UTI LIC KOTAK RELIANCE ICICI HDFC Schemes CG SG Corporate-CG E TIER I C G E TIER II C G NPS Swavalamban

25 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 ix. Year on year growth in the subscribers across all sectors(%) Year CG subscrib ers (i) Yo Y Gr ow th rat e % SG subscrib ers (ii) YoY Grow th rate % Corpor ate subscri bers (iii) YoY Growth rate % UoS subscr ibers (iv) YoY Gro wth rate % NPS-Lite subscrib ers(v) Yo Y Gr o wt h ra te % Total Number of Subscri bers under NPS (vi) 31/03/ , /3/ , ,427 50, , /3/ , , , ,300 34, , /3/ , ,156, , , , /3/ ,126, ,640, , , ,779, /3/ ,342, ,006, , , ,816, /3/ ,511, ,630, , , ,146, Yo y Gr ow th rat e % Total Number of Subscribers in NPS Number of Subscribers

26 x. Year on year growth in AUM across all sectors(%) Year AUM CG YoY gro wth % AUM SG YoY growt h % AUM Corp YoY growth % AUM UoS YoY growt h % AUM NPS- Lite Mar- 09 2, YoY growth % Mar- 10 4, Mar- 11 7, , , Mar , , , Mar , , , Mar , , , Mar , , , , Year Total Asset Under Management in NPS (in crores) Mar Mar Mar Mar Mar Mar Mar

27 90000 Total Asset Under Management in NPS (in crores) Total Asset Under Management in NPS (in crores) Mar 10-Mar 11-Mar 12-Mar 13-Mar 14-Mar 15-Mar Year YoY % Growth in AUM in NPS Mar-09 - Mar % Mar % Mar % Mar % Mar % Mar % 26

28 Xi. Gender Wise Distribution in NPS as on 30 November, 2015 Sectors No. of Subscribers Male Female Trans Gender Total CG 1,428, ,280-1,589,661 SG 2,111, , ,820,414 UoS 85,113 28, ,665 Corporate 320, , ,205 NPS-Lite 1,404,830 3,062,135-4,466,965 APY 697, , ,161,949 Total 6,047,168 4,537, ,584,859 Gender wise distribution as on 30 November, 2015 APY NPS-Lite Corporate UoS SG Male Female Trans Gender CG - 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 27

29 xii) Age Wise Classification of subscribers as on 30 November, 2015 Age Group Central Govt. State Govt. Unorganised Sector Corpora te NPS-Lite APY Total Below 18 years 68 4, , years 301, ,385 4,077 72, , ,961 1,177, years 559, ,027 12, , , ,028 2,302, years 374, ,436 21,836 80, , ,521 2,246, years 180, ,331 23,417 36, , ,439 1,816, years 76, ,164 19,403 28, , ,266, years 50, ,069 14,816 16, , , years 34,722 90,160 10,861 6, , , years 11,656 39,907 6,034 3, , ,162 above 60 1,397 7, , ,253 Grand Total 1,589,661 2,820, , ,205 4,466,9 65 Age wise classification of subscribers as on 30 November, ,161, ,584,8 59 above years years years years years years years years Below 18 years Central Govt. State Govt. Unorganised Sector Corporate NPS-Lite APY 0 1,000,000 2,000,000 28

30 7. MACROECONOMIC STATISTICS Indicators Units As on 31 st October 2015 As on 30th November 2015 Absolute Change Percentage Change =Col 4- Col 3 S&P BSE Sensex , = {Col 5/ Col 3 }*100 CNX Nifty Rs/$ Gold $/Ounce Crude Oil (NYMEX) $/Barrel Whole Price Index ON BASE =100* (y-o-y) Consumer Price Index ON BASE 2012=100* (y-o-y) Index of Industrial Production** ON BASE = (y-o-y) 10 year G-Sec Yield p.a Rs. Foreign Exchange Reserve USD in bn Net FPI/FII(Equity) (Rs crore) Rs Crore 6650 ( ) Net FPI/FII (Debt) Rs Crore ( ) Net FII (Total) Rs Crore ( ) FDI Equity Inflows^ Rs Crore * Figures of September and October, 2015 ** Figures of August and September, 2015 ^ Figures of June and July 2015 Source: BSE, NSE, RBI, CSO, SEBI, Dept. of Industrial Policy and Promotion 29

31 8. MAJOR NEWS CLIPPINGS ON PENSION a. In One Rank One Pension, Rs. 8,000 Crore Diwali Gift for Veterans All India Written by Sudhi Ranjan Sen Updated: November 08, :49 IST New Delhi: Over 25 lakh veterans across the country will get at least Rs. 3,000 to 5,000 more in pensions - depending on their last rank and years of service. And this will cost the exchequer a minimum of Rs. 8,000 crore to start with. The increased pension will be paid with effect from July 1, The Government issued the much awaited One Rank One Pension or OROP scheme. One Rank One Pension or OROP, a longstanding demand of ex-servicemen, will grant retired armed forces personnel pension parity with officers and jawans of the same rank who are retiring now. Consult Personnel Ministry before Policy Decisions on Pension Centre Consult Personnel Ministry before Policy Decisions on Pension No such order shall be implemented by the concerned departments or ministries without first referring the matter to DoP&PW for advice, according to a directive issued by Personnel Ministry. All central government departments have been asked to consult with Personnel Ministry before taking any policy decision on pension related matters. The move comes after it was noticed that in some cases where the courts have passed orders against Government of India, the administrative ministry has not consulted the Department of Pension and Pensioners Welfare (DoP&PW) on the question of filing appeal. In all cases where any policy issues relating to pension matters is involved, the DoP&PW should invariably be consulted before taking a decision on the question of implementation or otherwise of any order of a court, a directive issued by Personnel Ministry said. No such order shall be implemented by the concerned departments or ministries without first referring the matter to DoP&PW for advice, it said. Instructions have been issued from time to time that whenever there is any court order against the Government of India instructions on service matters, the administrative ministry, department or office shall consult the Department of Legal Affairs, Department of Personnel and Training and DoP&PW on the question of filing appeal against such an order, the directive said. There are about 55 lakh central government FRDA is not responsible for accuracy of data/information/interpretations and opinions expressed in the case of signed articles/speeches as authors are responsible for their personal views. PFRDA has no objection to the material published herein being reproduced, provided an acknowledgement of the same is made. 30