Hemant G. Contractor, New Delhi-based chairman of India's Pension Fund Regulatory and Development Authority, says he'll worry about whether India's citizens are saving enough to live comfortably in retirement another day. For now, he's focused on swelling the ranks of his countrymen putting away any savings at all toward that goal.
"Adequacy at the moment is not the prime concern," said Mr. Contractor, who oversees India's 2.7 trillion rupee ($37.9 billion) National Pension System, which was launched in 2004 as a mandatory defined contribution system for new government employees. Five years later, the mission of the NPS was greatly expanded, positioning the scheme as a voluntary retirement savings vehicle for all Indians, including the multitudes in the informal sectors of the economy.
"Our focus currently is on expanding coverage as much as possible … trying to see that everybody has some pension coverage or the other," he said in a recent interview.
The government has lent NPS and the Pension Fund Regulatory and Development Authority a hand in that regard, offering incentives for lower-income earners to climb onto the retirement savings train.
The NPS Swavalamban program, launched in 2010, offered matching government contributions of 1,000 rupees for people in the unorganized sector of India's economy willing to save between 1,000 rupees and 12,000 rupees a year for retirement. That effort was superceded by the Atal Pension Yojana program, launched in 2015, which offers low-income cohorts who save as little as 43 rupees a month from the age of 18 a lifetime pension in retirement ranging from 1,000 rupees to 5,000 rupees a month. Under the APY program, the government will contribute either 50% of a subscriber's contribution or 1,000 rupees, whichever is lower.
NPS' latest monthly data for November 2018 show the APY program — sold through banks and other channels — adding subscribers at a healthy clip of roughly 450,000 a month over the past year and a half, and closer to 630,000 a month for the 90 days through Nov. 30. That, in turn, has lifted the combined ranks of Indians saving for retirement through those incentive programs to 16.5 million as of Oct. 31 — 69% of NPS' 24.1 million participants.
Efforts to promote regular retirement savings have been aided by parallel campaigns — under the government formed in May 2014 by Narendra Modi — aimed at integrating the country's roughly 1.3 billion people into India's financial system.
The government's "massive campaign" to get people to open bank accounts — adding 340 million new ones over the past five to six years — has greatly enhanced the power of APY's bank-distributed platform, Mr. Contractor said.
That, in turn, has accelerated the growth in the number of low-income earners saving regularly for retirement. "We registered 100% growth last year … and this year (ended Dec. 31, 2018), on a much larger base, we'll probably reach growth of 50% to 60%," Mr. Contractor said.
PFRDA's near-term target is to expand the portion of India's population formally saving for retirement to 25% by March 2021 from about 15% now, he said.
The longer-term goal is to cover everybody, he said.