The assets under management (AUM) of the National Pension System (NPS) are expected to more than double to ₹29.5 lakh crore over the next five years, leading to the country’s pension AUM to reach around ₹118 lakh crore by 2030, according to DSP Pension Fund Managers.

As of date, the total NPS AUM stood around Rs 13.84 lakh crore, still short of the Pension Fund Regulation and Development Authority (PFRDA) Chairman Deepak Mohanty’s latest estimate of ₹15 lakh crore by March end.

The private sector’s contribution to NPS is expected to grow to ₹9.12 lakh crore from the current ₹2.78 lakh crore in the next five years with over 1.5 crore subscribers, said Rahul Bhagat, CEO at DSP Pension Fund Managers.

The government’s tax reforms, the inclusion of NPS in both old and new tax regimes, tax benefits for parents contributing to NPS Vatsalya, the adoption of private sector fund managers among government employees, and the integration of technology and AI in fund management are expected to be the key drivers.

The pension fund house has projected India’s elderly population to increase 2.5 times by 2050, with a rising life expectancy rate post-retirement, averaging around 20 years.

Indian retail investors are increasingly transitioning from traditional savings methods to market-linked investments, demonstrated by a decline in reliance on cash and bank deposits from 62 per cent to 44 per cent over the past decade, the fund house said.

Meanwhile, the retirement savings gap is expected to widen annually by 10 per cent, potentially reaching approximately $96 trillion by 2050.

Published on February 19, 2025