MUMBAI

Pension schemes under the National Pension System (NPS) and Atal Pension Yojana (APY) added 97 lakh new subscribers in 2023, taking the total subscriber base to 7.03 crore as of December 31, 2023, according to Pension Fund Regulatory and Development Authority (PFRDA) Chairman Deepak Mohanty.

The number of subscribers were up 16 per cent on year. Of the total subscribers, 5.3 crore subscribers invested in the Atal Pension Yojana, which had an AUM of ₹33,034 crore as of December 31.

“The subscriber number largely comes from the small ticket APY scheme. For NPS, the number is 1.41 crore, of which 90 lakh subscribers are Centre and state government employees and slightly over 51 lakh are from the corporate sector,” Mohanty said.

However, there has been a dip in online subscriptions, because of which PFRDA is working on reducing the investment journey and turnaround time through technological intervention. The regulator has also reached out to public sector enterprises and regional rural banks to push pension penetration and is trying to broad-base the subscriber base by encouraging more small businesses and women investors, he added.

PFRDA had set a target of enrolling 13 lakh corporate and individual subscribers under NPS in FY24, of which it has enrolled over 5.3 lakh subscribers so far.

Pension Corpus

Total AUM of the pension schemes rose 27.9 per cent during the year to ₹10.9 lakh crore at the end of December, of which ₹3.1 lakh crore was from central government employees, ₹5.4 lakh crore from state government employees, and ₹1.5 lakh crore from corporate employees. NPS accounted for ₹10.5 lakh crore of the total corpus.

The AUM had grown 22 per cent in FY23 to ₹9.0 lakh crore as of March 2023, and is expected to grow to  ₹12 lakh crore by the end of the current financial year, Mohanty said.

“Normally, the saving season is the last quarter (Jan-Mar) of the financial year, so we have seen numbers rising more in the last quarter,” he said, adding that keeping this is view, PFRDA believes this target “will be achievable”.

Of the total AUM, 17 per cent is invested in equities while the remaining is largely invested in government securities and AAA-rated corporate bonds. While investments in REITs, InvITs and AIFs are also allowed, their share remains small, Mohanty said.

The equity portfolio has given an average annual return of 13.3 per cent since inception and 24 per cent in 2023 on the back the surge in equities. On an overall basis, NPS has given a CAGR return of 9.5 per cent since inception.

Tax exemptions

Mohanty also called for exempting employers’ contribution to NPS up to 12 per cent of employees’ basic salary, from tax. Currently, the cap for tax exemption for employers’ of individual and corporate private subscribers is 10 per cent.

“We have made a case for bringing the tax benefits on employers’ NPS contribution at par with the employees’ provident fund (EPF) contribution limit of 12 percent,” he said, adding that the eventual aspiration is to go up to 14 per cent, at par with what government employees get.

Tax benefits on employers’ contributions across retirement schemes are capped at ₹7.5 lakh a year, in addition to the tax deductions for NPS of up to ₹1.5 lakh under section 80CCD(1) and an additional deduction of up to ₹50,000 under section 80CCD(1B).

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