Aided by strong response from non-government sector — individuals and corporate sector categories, the overall assets under management of the market-linked National Pension System (NPS) and Atal Pension Yojana (APY) touched ₹9.27-lakh crore as of end April 2023, up 25.4 per cent on a year-on-year basis, latest PFRDA data showed.

In end April last year, the overall AUM of NPS stood at ₹7.39-lakh crore. The latest growth rate of 25.4 per cent is better than the 22 per cent year-on-year growth rate seen in end March 2023. 

This growth has come about despite recent Budget announcement tweaking the tax breaks for NPS (by bringing an optional new taxation regime that would take away the tax deduction for NPS contributions).

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The continued strong performance of NPS is also some indication that young investors are showing preference for market-linked investments over fixed return vehicles.

Impact of global headwinds

After growing at robust Compounded Annual Growth rate (CAGR) of average 28 per cent in last years, the overall AUM saw sharp decline to growth level of 22 per cent in 2022-23 largely due to global headwinds such as geopolitical tensions and hike in interest rates by the US Fed and also owing to local developments such as the Reserve Bank of India move to hike policy rates.

Between end April last year and the just-concluded April month, the AUM of ‘corporate’ and ‘all citizen model’ categories grew 33 per cent and 35 per cent, respectively. 

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While the AUM of ‘corporate model’ grew 33 per cent y-o-y at ₹1.21-lakh crore as of April 29, 2023, the growth in ‘all citizens model’ was 35 per cent year-on-year at ₹44,385 crore, official data showed. 

In terms of number of subscribers, the growth was 20 per cent and 28 per cent, respectively. Nearly a million new subscribers were added cumulatively in the two categories of ‘corporate’ and ‘all citizens model’, fuelling overall growth in assets under management.

The frenetic pace in AUM of NPS can be gauged from the fact that the latest level of near ₹9.27-lakh crore is over a four-fold increase in the last five years to the level of ₹2.35-lakh crore as of end March 2018. The total number of subscribers in the last five years have surged from 2.11 crore to 6.36 crore, PFRDA data showed. 

Part of the reason for the strong show in NPS in recent years is increased awareness post COVID19 pandemic among retail segment to secure their financial future post-retirement. Financial security of family has become a key life goal for millions of Indian middle-class households post the pandemic.