National Pension System's assets cross the Rs 6-trillion milestone
Overall government and non-government subscriber count rises to 4.28 crore
May 26, 2021 / 06:23 PM IST
The assets under management (AUM) of National Pension System (NPS) has surpassed the Rs 6-trillion mark, the Pension Fund Regulatory and Development Authority (PFRDA) announced on Wednesday.
The AUM stood at Rs 6,03,667 crore on May 21, 2021. This includes AUM under NPS’ government, corporate, all citizens models as well as Atal Pension Yojana (APY). The AUM growth of the last Rs 1 trillion has been achieved in last seven months, an official government release said. The total subscriber base of the retirement scheme also grew to 4.28 crore in May.
“A growing realisation during this pandemic is the priority accorded by individuals to retirement planning for preserving their financial well-being,” said Supratim Bandyopadhyay, Chairman, PFRDA, elaborating on the reasons fuelling the growth.
NPS, which was originally introduced for central government employees in 2004 and extended to all Indian citizens in 2009, has gained traction over the years as a remunerative and tax-friendly retirement-planning instrument. With the Union Budget 2021 introducing a tax on interest earned on annual Employees’ Provident Fund (EPF) contributions of over Rs 2.5 lakh, some could see NPS as a better alternative.
“NPS is growing because of the kind of returns that we have been generating for subscribers over the last seven years. The aim is to reach an AUM of Rs 30 trillion by 2030 and we are on track to achieving it. With tax benefits on EPF being capped, I see more individuals as also superannuation funds shifting to us,” said Sumit Shukla, CEO, HDFC Pension.
Tax deduction available
Contribution to NPS is eligible for tax deduction under section 80CCD (1) up to the overall section 80C limit of Rs 1.5 lakh, besides an additional Rs 50,000 under section 80 CCD (1B). Employer’s contribution to your NPS also qualifies for exemption of up to 10 percent (14 percent for government employees) of your salary (basic plus dearness allowance) under section 80CCD (2). At maturity, when you turn 60, you can withdraw up to 60 percent of your corpus, tax-free. But is is mandatory to use the balance 40 percent to buy annuities. The annuity income is taxable as per the slab rate applicable to you. This remains a hurdle in the case of NPS, though there are plans to offer a systematic withdrawal option in future to subscribers instead of annuitisation.