All UBI branches to sell National Pension System

MUMBAI: The pension regulator today said banks are reluctant to distribute new national pension product despite higher returns that it gives in the long-run.

"Only about eight per cent or 4,000 branches out of over 50,000 bank branches are selling New Pension System ( NPS)," Pension Fund Regulatory & Development Authority ( PFRDA) chairman Yogesh Agarwal said.

Agarwal was here at the launch of special NPS facility developed by Union Bank of India under which UBI will distribute NPS through all its branches.

"Due to poor distribution and very low commission, NPS could not take off. We have around 20 lakh members, besides around 6 lakh corporate accounts. Out of this, 12 lakh are Central employees and 6 lakh state staff. The corpus is still small at around Rs 9,000 crore," Agarwal said.

He urged other banks to come forward to distribute it, as NPS distribution has not really picked up despite over six years into operations.

"Pension fund gives the best return. It gives nearly 30 percent more return than insurance or MFs," he said.

He also pointed out though banks were asked to switch to NPS from April 2010, no tangible rise in membership is visible as yet.

On the other hand, UBI said after piloting NPS distribution at 27 of its branches, all its 3,000-plus branches will be selling NPS now,

"This is part of our overall objective of offering the complete suit of banking and financial products from under one-roof," UBI Chairman and Managing Director M V Nair said.

The contributory NPS was launched by the Centre for its employees in January 2004. In May 2009, it was extended to other people in the 18-55 age bracket.
As a part of its social and economic inclusion programme, the Centre also launched a rural pension scheme--NPS Swavalamban in September 2010.