News Explained: How did the National Pension System surpass the ₹10 lakh crore AUM mark?

In this podcast, businessline's Senior Deputy Editor, KR Srivats, discusses the significant growth in India's National Pension System (NPS) assets under management (AUM), which recently surpassed ₹10 lakh crores.

The NPS is a defined contribution scheme that allows subscribers to accumulate savings for retirement over their working lives. The growth in AUM can be traced back to 2004 when the Indian government transitioned from a defined-benefit pension system to the NPS. Initially, it was only open to government employees, but it was later expanded to include corporate employees and individuals. 

The recent surge in AUM can be attributed to two main factors. Firstly, both the equity and debt markets have performed well in the last few years, with equity indices nearly doubling post-COVID-19. Secondly, there has been a substantial increase in the number of individuals and corporate employees joining the NPS system. Currently, there are around 49 lakh individual subscribers, including 18 lakh corporate employee subscribers.

The podcast also touches on the introduction of a systematic withdrawal plan, which would allow retirees to receive periodic payments from their NPS corpus. This new feature is expected to provide flexibility to retirees. 

Regarding gender disparity in NPS participation, it is noted that only 22 per cent of corporate NPS subscribers are women. Several factors contribute to this gap, including low labour force participation among women, a lack of awareness, and the traditional gender roles in Indian society. To bridge this gap, Srivats suggests raising awareness, enhancing financial literacy, offering gender-sensitive products, and implementing supportive corporate policies. 

The growth of the National Pension System in India has been driven by a combination of market performance and increased participation from individuals and corporate employees. However, addressing the gender gap in NPS participation requires a multi-faceted approach, including awareness campaigns, financial education, and gender-sensitive policies. Listen in. 

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