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PFRDA data showed that there has been a sharp rise in subscribers from 2.11 crore in FY18 to 6.33 crore in FY23 and a 400% rise in AUM in the same time period.
The National Pension System or NPS needs a big push from the intermediaries, Deepak Mohanty, chairman of the Pension Fund Regulatory and Development Authority (PFRDA) has said emphasising the goal to bring more women under its cover.
Incidentally, the assets under management of NPS and Atal Pension Yojana stood at about Rs 9 lakh crore at the end of FY23, registering a growth of 22% on a year-on-year basis.
PFRDA data showed that there has been a sharp rise in subscribers from 2.11 crore in FY18 to 6.33 crore in FY23 and a 400% rise in AUM in the same time period.
Though the adoption rate has been quite fast, the PFRDA chairman justified his concern saying that the younger generation are not inherently inclined towards pensions.
“Intermediaries should aim to expand the subscriber base. Survey data suggests that even those financially capable of subscribing to the NPS are still not adequately covered. For, instance, the inclusion to women is insufficient. Similarly, the adoption of NPS among professionals, small businesses and the self-employed is comparatively low,” said Mohanty.
Apart from low penetration among the women, NPS is not adequately adopted by the self-employed and independent professionals, a section that is need to fend for themselves. The PFRDA chief pointed out that the poor adoption stands out especially since the Income Tax Act has incentivised its adoption. There is an exemption of up to 20% of the gross income or Rs 1.5 lakh (whichever is lower) on contributions to the NPS.
He also pointed out demographic changes such as rise in life expectancy is making pensions more and more necessary. According to global examples, often more than one retirement scheme cover is important.
He also emphasised that the need for the individual making his own contributions to create avenues for post-retirement income is rising. The structure of the labour market in India with a small share of the organised sector in the economy necessitates it.