For low-income individuals, such as gig economy workers, couriers, freelancers, and those in the informal sector who struggle to save large sums regularly, the Pension Regulatory and Development Authority (PFRDA) is preparing to expand its digital capabilities.
The NPS Tatkal service will allow users to open a pension account in just three clicks using bank KYC data and make small contributions, such as 10 rupees via UPI.
These details were announced by PFRDA Chairman, S. Raman, during the 'Leadership Event on NPS Tatkal' in Mumbai. The goal of this initiative is to simplify the process of opening and topping up pension accounts so that low-income individuals can build retirement capital by saving small amounts. The regulator aims to attract 4–5 million new NPS customers over the next two to three years. Furthermore, PFRDA has set a target of reaching a pension corpus of 100 trillion rupees by 2040, significantly earlier than planned.
The primary objective of NPS Tatkal is to make the pension account opening process fast and simple. Unlike previous procedures that required filling out extensive data, the new feature utilizes existing client KYC records held by the bank. This eliminates the need for the user to repeatedly enter personal information. According to the PFRDA Chairman, the entire registration process can take about 10 seconds, following the 'NPS in three clicks' principle. Existing banking and UPI systems are used, which removes the need for complex additional procedures to connect to the pension account. The exact launch date for NPS Tatkal has not yet been announced.
A key advantage of NPS Tatkal is the ability to save with small amounts. Customers can contribute 10 rupees daily or even hourly to their NPS account via UPI, entirely at their discretion. For instance, if a person contributes 10 rupees daily, 300 rupees will accumulate in their account over 30 days. Thus, even regular small contributions allow one to start pension savings. However, it is important to note the distinction: 10 rupees is the minimum contribution, whereas opening an NPS account requires a minimum deposit of 250 rupees. There is currently no transaction fee charged within NPS, so small top-ups will not be burdened with extra charges.
PFRDA pays special attention to citizens whose income fluctuates monthly. This includes couriers, taxi drivers, freelancers, and informal sector workers. It can be difficult for them to set aside a fixed amount every month. When income is high, saving can be hindered by expenses and needs. The proposal of a daily contribution of 10 rupees may help them begin pension savings. PFRDA Chairman, S. Raman, stated that efforts are being made to make NPS the most accessible savings option for informal sector workers, couriers, and gig economy workers. He believes that the simplicity of making contributions and the ability to contribute according to one's own schedule can promote a saving habit.
Thanks to NPS Tatkal, banks will also be able to attract new customers. Banks will receive a registration fee of 100 rupees for each new account, as well as an annual commission of 0.2 percent of the funds held in the account. To illustrate, if a fund of 1 lakh rupees is in an NPS account, the annual commission will be around 200 rupees. PFRDA notes that because clients remain with the pension account for a long time, this allows banks to build long-term relationships with clients. The PFRDA Chairman called NPS one of the cheapest retirement products in the world, stating that the total commission is 0.2 percent of Assets Under Management (AUM) annually, which limits investment costs in this scheme.
The PFRDA Chairman also emphasized the need to increase pension coverage in the country. According to his data, India's workforce numbers around 600 million, while the total number of subscribers in the National Pension System (NPS) and Atal Pension Yojana (APY) is approximately 100 million. This means that, on average, only one in six workers is enrolled in these two pension schemes. Approximately 1.5 million government and 1 million non-government subscribers are registered in NPS. PFRDA believes that the potential for joining pension programs in the country is very high. The regulator expects that thanks to digital capabilities like NPS Tatkal, another 4–5 million new customers will join in the next two to three years. PFRDA Chairman Raman stated that his goal is to transform India into a 'pension society.'
