NEW DELHI: Bucking the general trend in retiral savings schemes, contributions to the National Pension System grew by 6% in the first quarter of the fiscal despite thousands losing jobs amid a national lockdown to contain the spread of Covid-19.
The government-initiated pension scheme also increased its subscriber base by 1.5% to 35 million in the June quarter, up from 34.5 million as of March end, with maximum additions under the Atal Pension Yojana, official data showed.
“Tax incentives under the scheme for savings was extended by the government twice during the pandemic for 2019-20, which resulted in new additions and increase in contribution,” said an official at Pension Fund Regulatory and Development Authority (PFRDA) that regulates NPS.
Total contribution under the scheme in the first quarter stood at Rs 3.38 lakh crore against Rs 3.18 lakh crore in the quarter ended March 31, showing a growth of 6.3%, according to official data reviewed by ET.
Even withdrawals from the scheme fell by 8% during the pandemic, contrary to Employee Provident Fund Organisation (EPFO) that witnessed a dip in subscriber addition and a surge in withdrawals after the government made special provisions to withdraw under the scheme.
Partial withdrawal under the scheme during the April-August period stood at Rs 59.5 crore against Rs 64.9 crore withdrawn during the same period last year. The number of withdrawals decreased to 8,814 during April-August from 10,527 a year earlier.
Lower withdrawal from NPS can be attributed to a lower percentage of funds available under the scheme for withdrawal, which makes it less lucrative, an industry expert said on the condition of anonymity.
NPS allows only 25% of subscribers’ contribution to be withdrawn at any given time. On the contrary, the government had provided that EPFO subscribers could withdraw either three months’ basic salary of 75% of the kitty, whichever is lower, during the pandemic to help its subscribers tide over any financial crisis.
From the corporate sector, 57% of the contribution to NPS comes from workers in the 26-35 age bracket while the maximum contribution of 34% from all individuals comes from people in the 36-45 age bracket.