The National Pension System (NPS) from October 1 has allowed subscribers to allocate up to 100 percent of their portfolio to equities, compared with the earlier ceiling of 75 percent, under a new multiple scheme framework. Announcing the move at NPS Diwas in New Delhi, Finance Minister Nirmala Sitharaman suggested that pension products must also offer inflation-linked benefits to remain fiscally sustainable and meaningful for retirement security.
“Inflation benefits should be there in pension so that pension remains fiscally sustainable,” the minister said, adding that “pension is important for old age.”
Sitharaman was addressing the conference NPS Diwas Conference on ‘Inclusive Pensions, Innovative Solutions: Strengthening Retirement Security in India’ organised by Pension Fund Regulatory and Development Authority (PFRDA) in New Delhi.
High Returns
She emphasised that the NPS has consistently delivered high returns since inception. “Average annual return in NPS since inception for equity schemes have been 13 percent. Returns have been 9 percent for corporate debt, and government bond schemes,” she said, noting that these were “above prevailing in market for other schemes.”
Sitharaman emphasised the role of pensions in social and economic stability. “Strong pensioned society strengthens households, eases pressure in young population, channels savings in priorities,” she remarked, adding that the sector is now gaining “the full-fledged robustness needed for India.”
Focus on gig workers
The minister called for simpler norms to bring gig and platform workers into the pension net. “The NPS onboarding requirement should be made simpler for gig workers,” she said, adding that “today’s workforce is characterised by entrepreneurs, gig workers… [who] need to build their own portable flexible retirement plan.”
She stressed that the affordability of the NPS makes it well-suited for those with fluctuating incomes. “NPS’ minimum annual contribution is Rs 1000 per annum, it suits gig workers who have volatility in job. As India moves towards Viksit Bharat 2047, every citizen can now have financial dignity in old age via Pension.”
PFRDA Chairperson S Ramann said the regulator has introduced “multiple scheme framework with more flexibility in withdrawals.” He added that the NPS had 9 crore subscribers with assets under management (AUM) of Rs 15.58 lakh crore as of August 31.
Low pension savings
Department of Financial Services (DFS) Secretary said, “Proportion of savings for pension in people's overall financing savings is still very low,” adding that “a lot needs to be done to reach pension saturation in India.”
The Atal Pension Yojana (APY), targeted at low-income groups, had 8.25 crore subscribers with an AUM of Rs 47,971 crore as per latest data.
Chief Economic Adviser (CEA) V Anantha Nageswaran noted the broader context, saying, “Even as environment becomes more challenging externally, endeavour is to promote domestic growth.”
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