The Pension Fund Regulatory and Development Authority (PFRDA) has announced that the total corpus under the National Pension System (NPS) and Atal Pension Yojana (APY) has crossed Rs 11 lakh crore as of January 10, 2024. This is a significant achievement for the pension sector in India, which aims to provide social security and retirement benefits to millions of citizens.
What is NPS and APY?
NPS and APY are two voluntary pension schemes regulated by PFRDA, which allow subscribers to contribute a fixed amount every month towards their retirement fund. NPS is open to all Indian citizens between 18 and 65 years of age, while APY is targeted at the unorganised sector workers who are not covered by any formal pension scheme. Both schemes offer multiple investment options and tax benefits to the subscribers.
How did the corpus grow so fast?
According to PFRDA Chairman Deepak Mohanty, the total corpus under NPS and APY has increased from Rs 10 lakh crore to Rs 11 lakh crore in just 4 months and 18 days, which is a record growth rate. He attributed this to several factors, such as:
- Increased awareness and participation of the private sector, which has crossed Rs 2 lakh crore in AUM.
- Enhanced digital infrastructure and ease of access for subscribers, especially during the Covid-19 pandemic.
- Improved performance and returns of the pension fund managers, who have delivered an average annualised return of 10.52% since inception.
- Incentives and subsidies provided by the government for promoting pension inclusion, such as co-contribution, tax deduction and guaranteed minimum pension.
What are the future plans of PFRDA?
PFRDA has set a revised target of Rs 12 lakh crore AUM for the current fiscal year, which it expects to achieve by March 2024. It is also working on introducing a minimum assured pension plan, which would provide a guaranteed monthly income to the subscribers after retirement. However, this plan would require resolving some issues related to the rate of return, fund manager liability and guarantee mechanism.
PFRDA has also requested the government to increase the assured monthly pension under APY from Rs 1,000-5,000 to Rs 2,500-7,500, which would benefit more than 3 crore subscribers. This proposal is on the ‘wishlist’ of PFRDA for the upcoming Interim Budget, which will be presented by Finance Minister Nirmala Sitharaman on February 1.