Continued volatility in equity markets and the decline in broader equity markets since late September have dragged the annual NPS return on funds parked in equity schemes to 24.37 percent as of December 14, the latest PFRDA data shows .
This compares with an annualized return of almost 40 percent recorded on September 28, when equity benchmarks hit an all-time high. By November 10, returns had fallen by 30 percent. On November 30, interest rates fell further by 26.6 percent.
Both Sensex and Nifty50 have fallen almost 10 percent so far from their record highs in September 2024, sending investors into panic.
While Nifty50 touched an all-time high of 26,277.35 on September 27, Sensex had touched an all-time high of 85,978 on the same day. Nifty50 has seen a sharp decline of 2,740 points (a drop of around 10 percent) since September-end on December 20, pressured by lackluster corporate earnings in the second quarter, a disappointing GDP slowdown in the second quarter and a record FPI loss as result of ‘Trump Trade’ amid rising US interest rates. .
However, the total NPS Assets Under Management (AUM) rose to ₹13.79 lakh crore on December 14 from ₹13.46 lakh crore on November 10.
NPS assets grew 27.34 percent year-on-year as of December 14, official data showed.
At the end of September, total NPS assets stood at ₹13.40 lakh crore, up 32 percent year-on-year.
Nifty50 ended October 2024 in deep red, with a plunge of 6.2 percent. This was the worst monthly performance for Nifty50 since the first wave of Covid19 that shook the world in March 2020. BSE Sensex saw a decline of 5.83 percent in October 2024.
Although the average annual return on equity schemes has declined since September-end, it was much higher than the 12.59 per cent in central government schemes and 12.68 per cent in state-run schemes. The average return generated by the pension funds for Atal Pension Yojana last year was 12.72 percent, while the return since inception was 9.24 percent.
Over the past year, thanks to buoyant stock markets, NPS money parked in pure equities has delivered astronomical returns of up to 40 percent.
The NPS scheme has generated competitive returns since its inception. For the public sector, the NPS has delivered an average return of 9.5 percent since its inception. For the non-government sector, the equity scheme has delivered a return of 13.85 percent, corporate bonds 9.13 percent and government bonds 8.84 percent.
Private sector assets under management
Private sector NPS asset growth saw a modest increase, growing 36.40 per cent at ₹2.77 lakh crore as on November 30.
At the end of October, it stood at ₹2.70 lakh crore, up 44.52 per cent year-on-year.
The number of NPS subscribers in the non-government sector (private sector) also saw impressive growth, increasing 21.21 percent YoY to 61.54 lakh, the latest data from the Pension Fund Regulatory and Development Authority shows (PFRDA).
The strong private sector NPS asset growth of 37 percent has substantially exceeded the public sector’s 27 percent annualized growth, albeit at a much higher level.
The NPS assets of the public sector (center and state government) reached ₹10.54 lakh crore as on December 14, PFRDA data showed. This was higher than the AUM of ₹10.23 lakh crore as at end-September 2024.
The rise in NPS assets in the private sector highlights the increasing appeal of NPS as a preferred vehicle for retirement savings, say retirement industry observers.
This steady increase in participation underscores the private sector’s continued recognition of NPS as a flexible, cost-effective and tax-efficient solution for long-term financial planning, she added.
NPS for the corporate sector
The corporate sector-related NPS continued to show robust growth in assets under management at ₹2.06 lakh crore as on December 14 (₹1.51 lakh crore as on December 2 last year). The ‘All Citizen Model’ (basically individuals) had assets worth ₹70,417 crore.
The number of subscribers in the corporate sector (employees of companies who have signed up) stood at 22 lakh, while there are 39.54 lakh subscribers in the ‘All Citizen Model’.
