Pension boom: NPS and APY gain 97 lakh new subscribers in 2023, totalling 7.03 crore

PFRDA's record influx: Pension Fund Regulatory and Development Authority (PFRDA) Chairperson Deepak Mohanty announced that pension schemes, including the National Pension System (NPS) and Atal Pension Yojana (APY), have seen an addition of 97 lakh new subscribers in 2023. The total subscriber base now stands at 7.03 crore as of December 31, 2023, with 5.3 crore subscribers investing in the Atal Pension Yojana, boasting an Asset Under Management (AUM) of Rs 33,034 crore.

The collective corpus of NPS and APY has risen to Rs 10.9 lakh crore, marking a substantial 27.9 per cent YoY surge as of December 31, 2023. Notably, corporate employees contributed Rs 1.5 lakh crore, state government employees added Rs 5.4 lakh crore, and central government employees accounted for Rs 3.1 lakh crore.

PFRDA's AUM aspirations

Chairperson Mohanty expressed optimism about achieving the target of reaching Rs 12 lakh crore in pension fund assets under management by the end of March 2024. PFRDA had earlier revised its target from Rs 11 lakh crore in September 2023.

In terms of investments, 17 per cent of the total AUM is in equities, while the remaining is predominantly in government securities and AAA-rated corporate bonds. The equity portfolio has delivered an average annual return of 13.3 per cent, with 24 per cent return in 2023. The overall Compound Annual Growth Rate (CAGR) return for NPS since inception stands at 9.5 per cent.
 

PFRDA widens partnerships

To enhance pension plan penetration, PFRDA has collaborated with regional rural banks and public sector enterprises. The authority's net invested contribution rose by 22.3 per cent to Rs 7.68 lakh crore. As of December 29, the average annual return on equity investment was 24.2 per cent, compared to 8.2 per cent on government securities and 7.4 per cent on corporate bonds.

Mohanty advocated for tax deductions on employers' contributions to NPS, requesting parity with the 12 per cent limit of the employees' provident fund (EPF) contribution. Currently capped at 10 per cent, he emphasised the aspiration to eventually raise it to 14 per cent, aligning with government employees. Presently, tax benefits on employers' contributions across retirement schemes are limited to Rs 7.5 lakh per year, in addition to individual deductions under Section 80CCD(1) and 80CCD(1B).