NEW DELHI: The adoption of the National Pension System (NPS) by formal sector employees fell to a four-month low in October, according to data released by the National Statistical Office (NSO) on Friday.
This fall is primarily on account of the slowdown seen in the adoption by the corporate sector employees.
Data shows the cumulative number of new monthly subscribers under the corporate sector, central and state governments that adopted NPS fell by 3.2 per cent to 70,947 in October from 73,318 in September. Earlier, 54,715 new subscribers had joined the NPS in June.
Under the corporate component, which is voluntary in nature and includes people working in public-sector organisations, private limited companies or public-sector banks, among others, the number of new subscribers joining the NPS during the month declined by nearly 10 per cent to 10,341 from 11,421 in the previous month.
As Business Standard reported earlier, the corporate segment has seen a decline in recent months due to the increase in the exemption limit of income tax to ~7 lakh announced in the FY24 Budget, as it no longer requires employees under this income bracket to opt for the NPS for tax-saving purposes.
“People generally enrol under the corporate component as they see it as a tax-saving instrument rather than a long-term pension or savings product. So, when the finance ministry [decided to] raise the exemption limit earlier this year, people belonging to these income slabs saw no incentive to enrol under the NPS,” an official requesting anonymity had said.
Apart from this, since the Union government has mandated the NPS for all its new employees, this can be used as a proxy to gauge fresh recruitments at the central level. Under the central component, new subscribers declined slightly to 18,780 in October from 18,937 in the last month.
Similarly, 41,826 new subscribers joined the NPS in October from 42,960 in September under the state component. However, since a few states like Rajasthan, Chhattisgarh, Himachal Pradesh, Jharkhand, and Punjab had announced a return to the Old Pension Scheme (OPS), abandoning NPS, it cannot be used as an exact metric to gauge the hiring trend at the state level.
Of the total new subscribers, the share of young subscribers belonging to the 18-28 age group increased to 49.5 per cent in October from 48.7 per cent in September. This is crucial because people belonging to this age group are first-timers in the job market and thus reflects the robustness of the job market.
Source: Business Standard
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