Aided by a strong showing from non-government sector, the National Pension System (NPS) assets under management (AUM) recorded a robust 30.5 per cent year-on-year (YoY) growth in 2023-24 to touch ₹ 11.73 lakh Crore (₹ 8.98 lakh crore), latest PFRDA data showed.
This growth was largely fuelled by the 9.47 lakh new subscribers who onboarded NPS from the non-government sector. Of these 9.47 lakh new subscribers, 8.10 lakh were from the ‘all citizen model ‘ and 1.37 lakh were Corporate employees.
The latest 30.5 per cent jump is also higher than the 27 per cent year-on-year increase seen in NPS assets last fiscal,
The overall growth of NPS assets this fiscal has been driven by buoyant equity markets and a widening NPS subscriber base as more working-age Indians take up retirement planning seriously.
The non-government sector—corporates and retail—saw a 41.67 per cent year-on-year growth in NPS assets to ₹ 2.27 lakh Crore as of March 31.
On the other hand, government employees’ assets have recorded 28 per cent year-on-year growth at ₹ 9.05 lakh crore as of March 31. The number of new government employees onboarded NPS in fiscal 2023-24 stood at 7.10 lakh.
NPS asset growth in recent years has been propelled by heightened awareness campaigns through various means run by industry participants and the regulator.
The pace of asset growth has been higher for the non-government sector than for government employees due to the higher allocation towards equity amongst the former category of subscribers.
Equity assets constitute around 18 per cent of the overall AUM, while for the Retail and Corporate Segment, it is relatively higher at around 40-45 per cent.
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In the corporate segment, while new subscriber additions are a tad slower than last year, given that the tax advantage under 80CCD (2) continues in both the new and old tax regimes, the number of companies adopting Corporate NPS for their employees continues to witness robust growth.
However, growth has ostensibly slowed down in the retail segment, according to industry insiders, given the adoption of a new tax regime by a number of taxpayers, thus neutralising the tax benefits that NPS offers.
Over 3,000 additional corporates have signed up for Corporate NPS for its employees this financial year.
EQUITY RETURNS SIZZLE
Roaring bull markets in equities have helped Pension Funds record a scorching average annual return of 35.42 per cent as of March 31, surpassing Corporate Bonds by over fourfold and outperforming Government Securities and State Government Schemes, according to the latest PFRDA data.
Over the past three years, Pension Funds achieved an average return of 18.07 per cent in equities, with returns since NPS inception coming in at 13.48 per cent for equity investments.
As of March 31 this year, Corporate Bonds recorded an annual return of 8.50 per cent, while Government securities saw a return of 9.86 per cent. The annual return from Central and State Government schemes stood at 12.52 and 12.46 per cent respectively, data showed.
The new subscriber addition of 9.47 lakh is a tad short of the million new subscribers targeted by PFRDA for 2023-24. Infact, PFRDA had an internal target of 13 lakh new subscribers for 2023-24.
Last fiscal year, PFRDA had added a million new subscribers.
The total number of NPS and APY subscribers as of March 31 this year stood at 7.36 crore, up 16.28 per cent over 6.32 crore in year ago.
After its implementation in 2009, NPS took six years and six months to reach the milestone of ₹ 1 lakh crore AUM. It then took four years and 11 months to increase AUM further to ₹ 5 lakh crore.
NPS AUM had doubled to ₹ 10 lakh crore as of August 25 last year from ₹ 5 lakh crore in just two years and ten months.