The latest data shared by Pension Fund Regulatory and Development Authority has shown that the burgeoning markets and growing popularity have pushed the National Pension System (NPS) assets. As of July 20, the assets had touched Rs 12.69 lakh crore, which is 28.33 per cent higher year-on-year. In FY24, NPS assets showed a 30.5 per cent growth and touched Rs 11.73 lakh crore. In fact, private sector NPS assets grew whopping 39.62 per cent year-on-year as on July 20, 2024, at Rs 2.52 lakh crore.
The number of subscribers in the private sector as of July 20 was 57.44 lakh, showing an increase of 9.12 lakh on a year-on-year basis. On the other hand, Atal Pension Yojana (APY) assets reached Rs 38,827 crore as of July 20, marking a 31.03% increase year-on-year.
In 2023-24, the PFRDA onboarded 1.2 crore APY subscribers, with a target of 1.3 crore for the current fiscal year. As of now, the net addition in the APY subscriber base for this fiscal year is approximately 20 lakh. The private sector has exhibited notable growth this fiscal year across all schemes, including APY. The private sector has been a significant factor contributing to the sharp increase in NPS assets in recent years.
The Budget for the year 2024 has recommended a revision in the tax deduction cap concerning private sector employers' contributions to their employees' National Pension System (NPS). The proposed adjustment suggests elevating the limit from 10% to 14% of the employees' basic salary. Consequently, private sector employees are now eligible to benefit from a tax deduction of 14% on employer contributions toward the NPS, in accordance with Section 80CCD (2).
PFRDA data revealed that as of July 23 in the current fiscal year, there were a total of 2,58,957 new registrations for both the National Pension System (NPS) and Atal Pension Yojana (APY).
Looking ahead, PFRDA has set a target to bring onboard approximately 11 lakh new NPS subscribers from the private sector for the financial year 2024-2025. In the preceding fiscal year, a notable figure of 9.7 lakh employees from the private sector had enrolled in the NPS. By July 22 of the ongoing fiscal year, there had been a net addition of 2.32 lakh private sector subscribers.
The significant expansion of the NPS assets is clearly visible, with the Assets Under Management (AUM) being only around Rs 1 lakh crore in 2015. It is noteworthy that the NPS assets had surged to cross the ₹10 lakh crore milestone in August of the previous year.
Pension funds have seen a significant upsurge in their returns, primarily driven by the booming equities market. Recent PFRDA data revealed that as of July 19, pension funds have recorded an impressive average annual return of 32.50 per cent. This substantial growth has far surpassed the performance of corporate bonds by over four-fold and has also outshined government securities and state government schemes.
Looking back over the past three years, pension funds have consistently delivered strong returns in equities, averaging at 19.34 per cent. Since the inception of the NPS, equity investments have yielded an average return of 14.21 per cent.
Comparatively, as of July 19 this year, corporate bonds have generated an annual return of 7.70 per cent, while government securities have seen a return of 9.10 per cent. The annual returns from Central and State government schemes have stood at 11.33 per cent and 11.41 per cent, respectively, the data stated.
Overall, these numbers underscore the robust performance of equities in the pension fund sector and highlight the substantial disparities in returns across different investment vehicles.
From July 1, the PFRDA allowed T+0 settlement for NPS subscribers, under which contributions received by the Trustee Bank until 11 am (T) on any settlement day will be invested on the same day and the subscribers will get the benefit of same-day NAV (Net Asset Value), PFRDA said in a statement. Earlier, the timeline was T+ 1.
Hitherto, contributions received by the Trustee Bank are invested on the next settlement day (T+1), meaning contributions received until the previous day are invested the following day, it said.
Contributions are transferred to the designated account of the Trustee Bank (TB) subsequent to the exchange of information with Central Recordkeeping Agencies (CRAs). Upon receipt of contributions until the previous day (T), the Trustee Bank allocates these funds for investment purposes on the following settlement day (T+1).
Effective July 1, 2024, Trustee Bank (TB) and Central Recordkeeping Agencies (CRAs) will now consider contributions received by TB prior to 11 AM (T) on any settlement day for investment on the same day. It is important to note that contributions received by TB after 11 AM will be invested on the subsequent day (T+1).
The extended timeline for accepting contributions will apply to all types of contributions received by TB from/through Government Nodal Offices, PoPs, eNPS, D-Remit, UPI, etc. D-Remit contributions received by 9:30 AM on any settlement day which are already considered for same-day investment, will also be extended according to the revised timelines of 11 am.