National Pension Scheme (NPS): drawbacks?
“The government issues a half baked scheme and expects people to buy it?”
This is exactly what a person who had a choice told me. He was talking about the NPS. Many people have hailed it as a great scheme. I have serious misgivings.
The debt instruments that the NPS buys are not indexed. So literally the fund manager can buy anything – the risk is on the unit holder. Not a great situation to be in. Inertia will ensure that many people will be stuck with bad fund managers. See the mf industry – too many player, too many schemes, NOT enough returns. Bad situation.
Government servants are not allowed to go beyond 15% in equity, OTHER monies have to be in debt. Pension will decided on the basis of ??? (no clue)…..???
There are other issues also – it reminds me of a movie where Mahamood was almost a hero. He runs a movie (talkies) – when he gets a bad movie – he knows his audience (!) will not watch it.
He announces ‘free movie’ – everybody rushes in. He plays smart.
When the movie is over, he says “Exit Rs. 3”.
I hope NPS does not become like that for all of us…
pattu
I certainly hope so. I have a mandatory annual investment of over Rs. 1 lakh in Tier I and a little something in tier II. I look at the account every month and there has been steady growth. However we govt employees will know about exit options only after 25-30 years when the first batch of employees who joined after 2004 start retiring. No one including PFRDA has any clue!!
rrp
– I go by the following. I forgot who said this (perhaps Warren Buffet not sure)
“Only a fool gives his money to the government”
Ravinder Makhaik
The post reminds me of a Eagles number called Hotel California which has if I remember has a line that goes something like — you can come in but cannot leave
subra
Ravinder most people who know this song…are born before 1969 :)…ha ha ha
Dr. Vijayendra Kanwar
Well said guys!
NPS has many gud points- its cheapest in the world!
but many such flaws too
many things need to be sorted out,,,,