THE UNIVERSALITY OF "RISKY SCHEMES" IN THE ANGLOSPHERE:

New pension scheme: Good over the long term (Rediff, May 04, 2009)

The New Pension Scheme is one of the more ambitious programmes tried out by the government. If successful, it has the power to transform India's savings habits.

Millions of Indians who, today, don't have a long-term flexible savings option will now have one, irrespective of where they live and where they are employed. Unlike post office accounts and the Employees Provident Fund Organisation, opening and operating an NPS account is relatively easy since there are a host of banks (16 already) and six others (like the Life Insurance Corporation and Reliance Capital [Get Quote]) that offer these services across the country.

More important, the service follows you where you go.

Anyone who enrolls gets a unique number from the Central Recordkeeping Agency; each payment made to any bank branch automatically generates a credit in the unique account at the CRA; this number is retain by the saver, irrespective of change of location.

There is a choice of six fund managers as well as a menu of different investment strategies, with varying degrees of risk.

According to the provident fund regulator, the addressable market for the NPS is as many as 80 million people (about 20 per cent of the total workforce).

According to the Invest India Foundation, which is the source of the 80 million figure, the total investible amount is Rs 55,000 crore (Rs 550 billion) per annum; a decade from now, the assets under management will be Rs 12 lakh crore (Rs 12 trillion); within just three years of its existence, its corpus will equal that of the existing, decades-old EPFO.