There has been a manifold increase in assets under management (AUM) of pension fund managers - from Rs 2,202 crore in March 2009 to Rs. 8.99 lakh crore by March 2023, according to The Pension Fund Regulatory and Development Authority (PFRDA), which released its first ever Handbook of National Pension System (NPS) Statistics – 2023 on June 2.
This report covers data for all 13 pension fund managers registered with the PFRDA, which regulates the NPS. The three largest pension fund managers, SBI Pension Fund, LIC Pension Fund and UTI Pension Fund accounted for 93 percent of the pension AUM as of March 2023.
About NPS
NPS is a defined contribution pension scheme, which was first introduced for Central and State Government employees on January 1, 2004. Thereafter, it was extended to all Indian citizens from May 1, 2009. NPS subscribers are divided into what are called sectors - CG sector (central government employees), SG sector (state government employees), Corporate sector (NPS offered to private sector employees by their employers), All Citizen sector (individuals voluntarily subscribing to NPS), NPS Lite and APY. The latter two cater to providing a social security net to the economically disadvantaged groups.
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All Citizen sector has a small share
A sector-wise break down of NPS data throws up interesting trends. The share of the CG sector in the overall NPS AUM has gone down sharply - from 96 percent in March 2010 to 29 percent in March 2023. On the other hand, the share of the SG sector has risen from just 4 percent to 50 percent during this 13-year period. The Corporate sector share went up from under 1 percent in March 2011 to 13 percent by March 2023.
Note that the share of the All Citizen sector -which indicates the extent of voluntary subscription to NPS - was at only 4.3 percent as of March 2023, up from 0.6 percent in March 2011.
NPS gives a subscriber the option to withdraw 60 percent of his corpus at the age of 60. A subscriber also has the option of deferring this lumpsum withdrawal till 75 years of age But the remaining 40 percent has to be invested in an annuity scheme for a regular pension which is taxable. This reduces the attractiveness of the NPS which otherwise provides marked-linked returns - equity, government or corporate debt or alternate assets-linked, depending on the option chosen by the subscriber.
Number of subscribers
In terms of the number of subscribers, the CG sector has seen a four-fold increase in the number of subscribers to 23.97 lakh between March 2010 and March 2023. In case of the SG sector, the number has gone up from 1.8 lakh to almost 61 lakh during this period. Despite its small share in the overall AUM, the number of subscribers under the All Citizen sector has risen sharply from 4,141 in March 2010 to 29.6 lakh in March 2023.
Greater flexibility to NPS subscribers with regard to the 40 percent corpus (that today has to be necessarily invested in an annuity scheme) can help in enlarging the subscriber base under the All Citizen sector.
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