“Most workers are already outside the mandatory PF net as minimum wages in most sectors is much above Rs 6,500 per month.

Instead, the NPS offers higher returns and is a much more efficient scheme for corporate employers,” said Yogesh Agarwal, chairman, Pension Fund Regulatory and Development Authority (PFRDA) that runs the NPS.

Significantly, finance minister P Chidambaram at a recent meeting with industry chambers also asked them to prod their member companies to join the NPS.

Already, 350-odd companies, including Wipro, ICICI Bank and Reliance Group companies have begun to offer the defined contribution based pension scheme to its employees. Launched on May 1, 2009, the NPS for private citizens has over 2 crore subscribers and a corpus of over Rs 1,000 crore.

“Compared to the 8.25 per cent interest rate offered by the EPFO, the NPS gives average returns of 14 per cent in equity and corporate debt and over 10 per cent for government bonds making it a more optimum choice for workers,” said Agarwal, adding that tax benefits are also available for the scheme, which puts it at par with other similar retirement schemes.

The low wage cut-off for compulsory provident fund deposits has already become a cause for concern for Employees’ Provident Fund Organisation (EPFO) that is concerned over dipping membership that is resulting in a fall in contributions.

With minimum wages in most states over the Rs 6,500 per month ceiling, formal sector workers have begun to slip out of the PF net.