With equity benchmarks having slid over 10 per cent since end-September 2024, annual returns on monies parked in NPS equity schemes have dropped further to 15.86 per cent as of December 27, latest PFRDA data showed.
This is against an annual return of near 40 per cent recorded as of September 28, 2024, when equity benchmarks hit an all-time high. As of November 10, the return was down to 30 per cent. It had further slipped to 26.6 per cent as of November 30 and 24.37 per cent as of December 14.
Both Sensex and Nifty50 have till date fallen over 10 per cent from their record high hit in September 2024, sending investors into a tizzy.
While Nifty50 reached a lifetime high of 26,277.35 on September 27, Sensex hit a record peak of 85,978 on the same day.
- Market correction further trims NPS equity gains, annual returns moderate
Nifty50 has seen a sharp 2977 points fall (over 12.5 per cent fall) as of December 27 since end-September, weighed down by lacklustre Q2 corporate earnings, disappointing Q2 GDP slowdown, and a record FPI pull-out owing to ‘Trump Trade’ amid rising US yields.
However, overall, 2024 was a good year for Indian equities, recording the ninth straight year of positive returns, underscoring the sustained momentum in the Indian equity markets. Indian primary markets were the best ever with a fund mop-up of over $16 billion.
Overall, the NPS Assets Under Management (AUM) growth pace, too, moderated at 25.49 per cent y-o-y as of December 28, 2024, to touch ₹13.69 lakh crore. The NPS assets AUM grew a robust 27.34 per cent on a year-on-year basis as of December 14 to touch ₹13.71 lakh crore.
As of end-September, overall National Pension System (NPS) assets stood at ₹13.40 lakh crore, up 32 per cent on a year-on-year basis.
Nifty50 had closed October 2024 deep in the red, nosediving by 6.2 per cent. 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 5.83 per cent decline in October 2024.
Although average annual equity scheme returns have moderated since end-September, it was much higher than the 10.57 per cent in Central Government schemes and 10.68 per cent in State government schemes. Average return generated by Pension Funds for Atal Pension Yojana in the last one year stood at 10.69 per cent, while the return was 7.95 per cent since inception.
In the last one year, riding on buoyant equity markets, the NPS monies parked in pure equities has given astronomical returns going up to as high as 40 per cent.
The NPS scheme has generated competitive returns since inception. For the government sector, NPS has given an average return of 9.5 per cent since inception. For the non-government sector, the equity scheme has given return of 13.43 per cent, corporate debt 9.11 per cent and government securities 8.77 per cent.
Private Sector AUM
Private sector NPS assets growth, too, moderated as of December 28, clocking a year-on-year increase of 33.33 per cent at ₹2.74 lakh crore. This is against growth of 36.40 per cent at ₹2.77 lakh crore as of December 14 last year.
As of end October, it was ₹2.70 lakh crore, up 44.52 per cent on a year-on-year basis.
The number of NPS subscribers in the non-government sector (private sector) — including the newly launched Vatsalya scheme — saw impressive growth, with a 22.43 per cent year-on-year rise to 62.71 lakh, latest data from the Pension Fund Regulatory and Development Authority (PFRDA) showed.
The private sector’s strong NPS assets growth of 33 per cent has substantially outpaced the government sector’s 24 per cent year-o-year growth, albeit on a much higher base.
Government sector (Centre and State government) NPS assets touched ₹10.47 lakh crore as of December 28, PFRDA data showed. This was higher than the ₹10.23 lakh crore AUM as of end September 2024.
The surge in private sector NPS assets highlights the rising appeal of NPS as a preferred retirement savings vehicle, say pension industry observers.
This steady increase in participation underscores the private sector’s ongoing recognition of NPS as a flexible, cost-effective, and tax-efficient solution for long-term financial planning, they added.
Corporate Sector NPS
Corporate sector related NPS continued to show robust growth in AUM at ₹2.04 lakh crore as of December 28 (₹ 1.52 lakh crore as of Dec 30,2023 ). The ‘All Citizen Model’ (basically individuals) assets slipped to ₹69,346 crore.
The number of subscribers in the corporate sector (employees of companies who have signed up) stood at 22.08 lakh, while there are 39.80 lakh subscribers in the ‘All Citizen Model’.
Source: www.thehindubusinessline.com
