Pension Fund Regulatory and Development Authority (PFRDA) Chairman Deepak Mohanty has said that the pension schemes, such as the National Pension System (NPS) and Atal Pension Yojana (APY), have added 97 lakh new subscribers in 2023, taking the total subscriber base to 7.03 crore as of December 31, 2023. Of the total subscribers, 5.3 crore subscribers invested in the Atal Pension Yojana, which had an AUM of Rs 33,034 crore as of December 31.
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The total corpus of various schemes under the National Pension System (NPS) and Atal Pension Yojana has increased to Rs 10.9 lakh crore, a 27.9 per cent surge YoY as of December 31, 2023.
Of this, Rs 1.5 lakh crore were from corporate employees, Rs 5.4 lakh crore to state government, and Rs 3.1 to central government employees.
Speaking at an event in Mumbai on Friday, Mohanty said he is positive about reaching the target of pension fund assets under management (AUM) totaling Rs 12 lakh crore by the end of March 2024. Earlier, PFRDA had changed its target of assets under management from Rs 11 lakh crore in September 2023.
PFRDA had set a target of enrolling 13 lakh corporate and individual subscribers under NPS in FY24, of which it has enrolled over 5.3 lakh subscribers so far.
Investments and Pension funds
Of the total AUM, 17 per cent is invested in equities while the remaining is largely invested in government securities and AAA-rated corporate bonds. While investments in REITs, InvITs and AIFs are also allowed, their share remains small, Mohanty said on Friday.
The equity portfolio has given an average annual return of 13.3 per cent since inception and 24 per cent in 2023 on the back the surge in equities. On an overall basis, NPS has given a CAGR return of 9.5 per cent since inception.
To increase the penetration of pension plans, the authority has partnered with regional rural banks and public sector enterprises.
The authority’s net invested contribution rose 22.3 per cent on year to Rs 7.68 lakh crore. The average annual return on equity investment of the pension corpus was 24.2 per cent as of December 29, as compared to 8.2 per cent on government securities and 7.4 per cent on corporate bonds, PFRDA data showed.
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Top govt-backed pension funds
National Pension System
The National Pension Scheme (NPS), which was launched in 2004, is a market-linked pension plan that replaced the old pension scheme. It is a convenient way to efficiently park one’s long-term savings with a secure, regulated market-based return.
Atal Pension Yojana
The Atal Pension Yojana (APY) is for the poor, the underprivileged, and those working in the unorganised sector. The subscribers will receive a minimum monthly pension of between Rs 1000 and Rs 5000 per month. All Indian citizens between the ages of 18 and 40 are eligible for the APY.
Indira Gandhi National Old Age Pension Scheme (IGNOAPS)
Senior citizens can get a monthly pension under the IGNOAP scheme. The senior citizens aged 60-79 years who fall under the BPL category can claim a monthly stipend of Rs 300/-. After 80 years, the pension amount is increased to Rs 500 per month.
Varishta Pension Bima Yojana
The Varishta Pension Bima Yojana (VPBY) is a scheme for the benefit of senior citizens aged 60 years and above. The scheme is administered through Life Insurance Corporation of India (LIC). Under the Scheme the subscribers on payment of a lump sum amount get pension at a guaranteed rate of 9% per annum (payable monthly). Any gap in the guaranteed return over the return generated by the LIC on the fund is compensated by Government of India by way of subsidy payment in the scheme.
Tax exemptions
Talking about tax deductions, Mohanty asked the Centre to exempt employers’ contribution to NPS up to 12 per cent of employees’ basic salary, from tax. Currently, the cap for tax exemption for employers’ of individual and corporate private subscribers is 10 per cent.
“We have made a case for bringing the tax benefits on employers’ NPS contribution at par with the employees’ provident fund (EPF) contribution limit of 12 percent,” he said.
He added that the eventual aspiration is to go up to 14 per cent, at par with what government employees get.
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Tax benefits on employers’ contributions across retirement schemes are capped at Rs 7.5 lakh a year at present. This is in addition to the tax deductions for NPS of up to Rs 1.5 lakh under section 80CCD (1) and an additional deduction of up to Rs 50,000 under section 80CCD(1B).
