“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 allĀ  of us…

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  1. 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!!

  2. – I go by the following. I forgot who said this (perhaps Warren Buffet not sure)
    “Only a fool gives his money to the government”

  3. 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

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