The National Pension System (NPS) has been consistently gaining popularity as a reliable and efficient option for retirement planning. It posted strong year-onyear growth in AUM in both the ‘corporate model’ and ‘all citizens model’ at 33 per cent and 34 per cent, respectively, as on February 11, PFRDA data showed, reported Business Line.
There are numerous reasons for this, and one of the key reasons is improved awareness, postpandemic among the retail customers to secure their financial future post retirement.
In the nongovernment sector, NPS offers the ‘corporate model’ and the ‘all citizens model’. NPS’ assets under management (AUM) — one of the key indicators of growth — has been increasing steadily over the past few years, indicating that more and more individuals are choosing NPS as their retirement savings option.
The AUM has grown at a compounded annual growth rate (CAGR) of around 28 per cent over the past five years.
As on February 11 this year, the overall pension assets (NPS and Atal Pension Yojana) crossed ₹8.75lakh crore, up 22 per cent over ₹7.15lakh crore the same day last year.
The subscriber base stood at 6.18 crore as on February 11 this year against 5 crore the same day last year.
The overall AUM performance has been bolstered by sharp growth in AUM of the ‘corporate model’, which saw its assets grow 33 per cent on a year-on-year basis at ₹1.14lakh crore ( ₹85,475 crore). The number of subscribers under this model saw a sizeable growth of 21 per cent at 16.50 lakh (13.60 lakh), official data showed.
The ‘all citizen model’ saw its AUM record 34 per cent growth at ₹40,722 crore ( ₹30,365 crore). The number of subscribers in this model grew 34 per cent to 27.82 lakh (20.80 lakh).
All citizen model
One of the key reasons for the strong performance of the ‘all citizen model’ is the pension regulator PFRDA’s decision in June 2021 to allow individuals to work as distributors of pension products, sources said.
Earlier, only institutions were given the licences for distribution and the regulator had allowed entities such as banks, NBFCs and certain nonbank entities categorised as points of presence (PoP) to distribute pension products, they added.
Supratim Bandyopadhyay, former PFRDA Chairman, said the good response for both ‘corporate model’ and ‘all citizens model’ is due to a combination of factors. “One is increased awareness. Two, the tax benefit and, lastly, the kind of flexibility provided and returns generated by NPS so far over a period of time.”
