India Inc. is increasing its participation in the national pension system (NPS), recent data from NSO revealed. Corporate subscriptions during the month almost doubled to reach 29,333, a significant uptick from the previous month, when the figure stood at 14,395. In total, the corporate segment of NPS grew 17% to touch 18.31 lakh subscribers. The AUM under corporate NPS also swelled 36% to Rs 1,39,375 crore. July saw a total of 76,372 fresh enrolments, which encompassed central, state and corporate subscribers.
This impetus from the private sector has also boosted the overall corpus under NPS to over Rs 10 lakh crore, registering a 27% y-o-y growth. According to media reports, the aggregate corpus of NPS, including that of Atal Pension Yojana (APY), stood at Rs 10.22 lakh crore. NPS AUM had breached the Rs 10 lakh crore milestone very recently, in August, 2023.
Why does this matter?
Corporate subscribers are largely voluntary, which means they can choose other investment alternatives. That they are choosing to put aside a part of their monthly income in NPS is testament to its rising popularity for retirement planning and long-term investing. Additionally, NPS is also very popular from a taxation standpoint. Employees can save up to Rs 2,00,000 via NPS deductions.
And not just the corporate model, the all-citizen model also saw robust growth. The subscriber count witnessed a 23.85% jump in subscriber base, touching Rs 30.82 lakh, with the AUM rising 35% to touch Rs 49,018 crore.
Under NPS, one can choose from 11 pension fund managers, apart from creating a portfolio using four asset classes, namely equity, corporate debt, government bonds and alternative investment funds (AIFs). Data notes that as of March 31st, 2023, NPS had invested the most (Rs 4,664,247 crores) in government securities, followed by corporate bonds (Rs 2,44,740 crores) and equities (Rs 1,48,844 crores).
Three fund managers, namely SBI, LIC and UTI emerged as popular choices, managing about 92.67% of the entire NPS AUM. The scheme found more takers in non-metro cities, which made up for 89.92% of all subscribers. Metro cities made up only 10.08% of the total subscriber base. However, the gender breakdown in NPS remains greatly skewed towards men, who make up 57.04% of the total base, while women constitute 42.94%.
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