Mumbai: The chairman of the Pension Fund Regulatory and Development Authority (PFRDA), Deepak Mohanty, has proposed an increase in the National Pension System (NPS) employers’ contribution limit from the current 10% to 12%. Ideally, he suggests aligning it with the employees’ provident fund (EPF) contribution limit of 12%. Mohanty emphasizes that bringing the tax benefits on employers’ NPS contributions at par with EPF would be a positive step.
Under the present regulations, the NPS employers’ contribution limit for subscribers under private sector individual and corporate schemes is 10%. Mohanty believes that eventually, the aspiration should be 14%, similar to the limit for government employees.
Speaking at a media meet in Mumbai, Mohanty stated, “The aspiration is 14 percent – in line with what the government employees get – but we hope that it will be brought at par at least with EPF to start with.”
The proposal seeks to make employers’ NPS contributions of up to 12% of employees’ basic salary exempt from tax, mirroring the EPF rules where both employee and employer contributions can go up to 12%.
The PFRDA aims to enroll 13 lakh corporate and individual subscribers in the 2023-24 financial year. The total assets under management (AUM) in the NPS ecosystem have reached Rs 11 lakh crore, with over 5 lakh subscribers added this year.
Equities constitute only 17% of the AUM, while government securities and AAA-rated corporate bonds dominate the rest. The overall NPS subscriber base, including government employees and Atal Pension Yojana (APY) subscribers, witnessed a 16% growth, reaching 7.03 crore in December 2023.
