Any pension scheme
– I dont have belief in *any pension scheme* exactly for the same reason. After accumulating huge money, user dont get to take it. Instead it goes to some annuity provider who gives a predetermined interest rate at a pittance 5% or so.
(God knows what happens after person dies, hopefully corpus goes to nominee)

– Since this annuity money is constant, its purchasing power reduces because of inflation. (Person may live again for another 10-20-30 years and purchasing power would have reduced by 1/2,1/4,1/8 minimum at 6% inflation. With higher inflation, it will be even far worse because of compounding).

– So the money has to ideally go into some balanced fund which gives above inflation returns.

– High Lockin . If fund doesnt perform, one cant do anything, keep investing with loser.

– So i dont put in any pension fund. Instead i put in MF and will shift some money to balanced fund during retirement. Other half will still be in equity. (as you said this option depends on how good/disciplined is a person to manage his own money)

Other reasons especially -ve to NPS

– Govt is all too powerful to leave money with them. If they say later or change rules, now we can only give 10% of corpus, rest 90% you have to buy pittance annuity, one has no choice.
(A few years back didnt a state in india do something similar like that with pension benefits of state employees and those employees had *no choice*)

– Everytime there is a divestment, and govt asks the NPS to make stupid investment, they have no choice but to obey. Whatever other kinds of investments like bonds etc, if govt asks they have to buy.
(yes NPS is managed by private funds, they may oblige, not to incur wrath of govt and loss of future business)

– Not much incentive to perform. There is high lockin. People cant take money outside until another 30 years, so no fear of anything. No one will get fired for under-performance.

– Uncertainty, over government changes. Whatever rulers come and whatever “games” they play with the money, investor cant do anything.

– Struggle to get money released. With such huge accumulated money, it may be a struggle to get a part of corpus released in the end. [It is difficult to get *any* money released from the govt]

@rrp
You are very correct.. If the NPS is successful and collects a lot of money, it will be too tempting for the politicians to use the money.. Its like a diabetic saying ” Ill just take a small bite of the cake” and then ending up eating up the whole cake..

All our politicians want to look charitable and large hearted.. But with other people’s money..

( I keep hearing from the US media that this is exactly what is happening with the social security funds in the US.. Some commentators even call it a Ponzi scheme..For eg..

“Bernie Madoff took money from people who thought he’d invested it, gave some to others who thought it was a partial return on their earlier investments and kept much for himself. That’s called a Ponzi scheme, and his $50 billion fraud was called the biggest ever. But it wasn’t the biggest. Social Security and Medicare are much bigger ones. These are trillion-dollar scams. Medicare has a $36 trillion unfunded liability. Social Security’s is $8 trillion. There’s no money to keep those promises. But Congress isn’t investigating this scam. Congress runs it. That FICA money you thought government had saved for your retirement is gone. There’s nothing left but IOUs backed by nothing. Your money was spent not only on current retirees but on wars, welfare, corporate bailouts, earmarks and all the other stuff Congress wants. For years, this was possible because the FICA tax brought in surpluses that allowed government to pay retirees more than they contributed and still help buy those other things. Those days are gone. … Our forefathers would be appalled. After the American Revolution, when the new government was debating how to pay its bills, George Washington said this about a national debt: ‘We should avoid ungenerously throwing upon posterity … the burden we ourselves ought to bear.’ Well, we sure are dumping my generation’s debt onto posterity. I wish we had more politicians like George Washington.” –columnist John Stossel)

“et us say you ARE FORCED to invest Rs. 250 lakhs in an annuity which pays Rs. 11,000 per month as a pension…”

This means an interest of about 0.5% on 250 lakhs.

This seems to be a bizarre underestimate to prove your point.

01 GOVT SHOULD TAKE RESPONSIBILITY OF PAYING PENSION (NOT THE INSURER).

02 THE PENSION AMOUNT SHOULD BE DECLARED.

THESE SO CALLED REGULATORS ONLY ARE VISIBLE WHEN THEY GET MONEY. WHEN IT COMES TO PAY , ALL ARE RUNNING AWAY FROM RESPONSIBILITY.

WHEN YOU CAN DECIDE WHAT YOU WANT, WHY CAN’T YOU DECIDE WHAT YOU PAY.

PFRDA IS JUST THROUGHING THE BALL TO REGULATORS AND WANTS TO MAKE USELESS RULES.

SUCH AGENCIES OR BROKERS SHOULD BE STOPPED. THEY ARE JUST ADDITIONAL COST TO PEOPLE IF THEY JUST DO NOT TAKE RESPONISIBLITY OF PAYING.

AS A CUSTOMER WE WANT SINGLE POINT OF CONTACT ie PFRDA OTHERWISE REQUEST THEM TO LEAVE FROM MAKING JUST USELESS RULES.

“You can only retire at 60” – NPS
Even the PPF has only a lock in of 15 years! For a young graduate joining job at age 22, the NPS is like a promise of heaven that may happen after 38 years!

Common – young aged people and 38 years of working?
Oh my good – the law/plan makers don’t understand young employees! Like NPS with a lower lock in of say 15 years and option to increment it in slots of 5 years.