A sharp 1600 points fall in benchmark Nifty50 in October has weighed in on the annual return generated by pension funds on NPS (National Pension System) monies parked in equity scheme.<\/p>\n
As against an annual return of near 40 per cent recorded as of September 28, the annual return from equity schemes has moderated to 33.52 percent as of November 2, latest PFRDA data showed.<\/p>\n
However, overall NPS assets remained flat at \u20b913.39 lakh crore as of November 2, albeit growing at lower year-on-year growth rate of 29 per cent. As of end September, overall NPS assets stood at \u20b913.40 lakh crore, up 32 percent on y-o-y basis.<\/p>\n
Benchmark Nifty50 had closed October 2024 in deep red, nosediving by 6.2 per cent. This was the worst monthly performance for Nifty50 since the first wave of Covid-19 that struck the world in March 2020. BSE Sensex saw a 5.83 per cent decline in October.<\/p>\n
Although average annual equity scheme returns moderated in October, it was\u00a0much higher than the 13.87 per cent in central government scheme and 13.97 per cent in State government scheme. Average return generated by Pension Funds for Atal Pension Yojana in the last one year stood at 14 per cent, while the return was 9.22 per cent since inception.<\/p>\n
In the last one year, riding on buoyant equity markets, the NPS monies parked in pure equities has given astronomical returns, going up as high as 40 per cent.\u00a0<\/p>\n
The NPS scheme has generated competitive returns since inception. For the government sector, NPS has given an average return of 9 per cent. For the non-government sector, the equity scheme has given return of 13.7 per cent, corporate debt 9.14 per cent and government securities 8.83 per cent.\u00a0<\/p>\n
\nPrivate Sector AUM
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Asset growth of private sector NPS saw moderation, clocking a 40 per cent growth at \u20b92.67 lakh crore as of November 2. As of October, it was \u20b92.70 lakh crore, up 44.52 per cent on a y-o-y basis.<\/p>\n
The number of NPS subscribers in the private secto also saw impressive growth, with a 21 per cent y-o-y rise to 60.5 lakh, latest data from the Pension Fund Regulatory and Development Authority (PFRDA) showed.<\/p>\n
The private sector\u2019s strong NPS assets growth of 40 per cent has substantially outpaced the government sector\u2019s 27 per cent y-o-y growth, albeit on a much higher base.\u00a0<\/p>\n
Government sector (Centre and State government) NPS assets touched \u20b910.25 lakh crore as of November 2, the PFRDA data showed. This was slightly higher than the \u20b910.23 lakh crore AUM as of September 2024.<\/p>\n
The surge in private sector NPS assets showcases its rising appeal as a preferred retirement savings vehicle, say pension industry observers. This steady increase in participation underscores the private sector\u2019s ongoing recognition of NPS as a flexible, cost-effective and tax-efficient solution for long-term financial planning, they added.<\/p>\n
While corporate sector related NPS accounted for\u00a0\u20b91.98 lakh crore AUM, the \u2018All citizen model\u2019 (individuals) had assets to tune of \u20b968,056 crore.\u00a0<\/p>\n
The number of subscribers in corporate sector stood at 21.71 lakh, while there are 38.81 lakh subscribers in \u2018All citizen model\u2019.<\/p>\n
\nKey attraction
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One of the key attractions for this uptake from the private sector in recent years is the \u201cflexibility\u201d that NPS offers in choice of investment pattern for such subscribers. PFRDA had recently further widened the choice for non-government sector with launch of Balanced Life Cycle Fund.\u00a0<\/p>\n
Unlike the NPS for government sector, the scheme for non-government sector (all citizens and corporate NPS) allows contributors to choose their asset allocation between equity, government bonds, corporate bonds and alternative investments, depending on their risk appetite.\u00a0<\/p>\n
This freedom appeals to a diverse range of private sector employees, from young professionals looking to maximize equity returns to risk-averse older employees preferring safer options. This flexibility also aligns with the changing financial mindset, as individuals increasingly seek personalized investment choices.<\/p>\n
Moreover, NPS stands out for its \u201ccost-effectiveness\u201d. With a low fund management fee of around 0.09 per cent, it is one of the most economical long-term savings instruments in India.\u00a0<\/p>\n