NPS equity gains lose steam, annual returns dip to 24.37 percent

The ongoing equity market volatility and slide in the broader equities since end September has dragged down NPS annual returns on monies parked in equity schemes to 24.37 per cent as of December 14, latest PFRDA data showed. 

This is against an annual return of near 40 per cent recorded as of September 28, when equity benchmarks hit an all time high. As of November 10, the return was down 30 per cent. It further slipped 26.6 per cent as of November 30.

Both Sensex and Nifty50 have till date fallen close to 10 per cent from their record high hit in September 2024, sending investors in a tizzy.

While Nifty50 reached a lifetime high of 26,277.35 on September 27, Sensex had on the same day hit a record peak of 85,978 on the same day. Nifty50 has seen a sharp 2740 points fall (about 10 per cent fall) as of December 20 since end September, weighed down by lacklustre Q2 corporate earnings, disappointing Q2 GDP slowdown and record FPI pull out owing to ‘Trump Trade’ amid rising US yields.

However, overall NPS Assets Under Management (AUM) inched up to touch ₹13.79 lakh crore as of December 14, from ₹13.46 lakh crore as of November 10. 

NPS assets grew robust 27.34 per cent on a year-on-year basis as of December 14, official data showed.

As of end September, overall NPS assets stood at ₹13.40 lakh crore, up 32 per cent on y-o-y basis.

Nifty50 had closed October 2024 in deep 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 percent decline in October 2024.

Although average annual equity scheme returns moderated since end September, it was much higher than the 12.59 per cent in Central government scheme and 12.68 per cent in State government scheme. Average return generated by Pension Funds for Atal Pension Yojana in the last one year stood at 12.72 per cent, while the return was 9.24 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 percent. 

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 13.85 per cent, corporate debt 9.13 per cent and government securities 8.84 per cent. 

Private Sector AUM

Private sector NPS assets growth saw modest increase, clocking a 36.40 per cent growth at ₹2.77 lakh crore as of November 30. 

As of end October, it was ₹2.70 lakh crore, up 44.52 per cent on a y-o-y basis.

The number of NPS subscribers in the non-government sector (private sector) also saw impressive growth, with a 21.21 per cent y-o-y rise to 61.54 lakh, latest data from the Pension Fund Regulatory and Development Authority (PFRDA) showed.

The private sector’s strong NPS assets growth of 37 per cent has substantially outpaced the government sector’s 27 per cent y-o-y growth, albeit on a much higher base. 

Government sector (Centre and State government) NPS assets touched ₹10.54lakh crore as of December 14, 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 ₹2.06 lakh crore as of December 14 (₹1.51 lakh crore as of Dec 2 last year). The ‘All Citizen Model’ (basically individuals) had assets to tune of ₹70,417 crore. 

The number of subscribers in Corporate sector (employees of companies who have signed up) stood at 22 lakh, while there are 39.54 lakh subscribers in ‘All Citizen Model’.