Challenges: The specific challenges in the design of the AABY scheme are related to its price, extent of coverage offered, and eligibility age for coverage. Analysis reveals that: (i) the extent of coverage provided by AABY does not provide adequate cover for even a 50 year old in the lowest income quintile; (ii) The current price of the AABY product is much higher than extant term life insurance policies in the Indian market; (iii) It is estimated that AABY premiums are more than 160% of the market price. Therefore, the extent of cover provided for the current premium of Rs. 200 should be higher than Rs. 30,000; (iv) AABY offers life insurance cover for …show more content…
(i) The current NPS-S investment mix should be changed to the life cycle fund mix, where the risk profile of asset allocation changes with age; (ii) NPS-S should offer capital guarantee to beneficiaries; (iii) Reduce Subscriber Minimum Pension Contribution, and Provide Unconditional Cash Transfer of Rs. 1000 per Month for the Elderly Poor; (iv) The minimum contribution for NPS-S should be reduced to Rs. 500. This will allow more subscribers to participate in the scheme and thus increase