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In a significant move, the Department of Public Enterprises(DPE) in the Finance Ministry has shot off letters to various Administrative Ministries and government departments to sensitise the Central Public Sector Enterprises (CPSEs) under their control about the benefits of adopting National Pension System (NPS) for their employees.
As of March 2024, 76 CPSEs have already adopted NPS to extend the pension benefit to their employees.
Sources said the latest DPE letter has been sent to the Chief Executive Officers of about 120 CPSEs (which have yet to adopt NPS for their employees).
It may be recalled that NPS was made mandatory for all Central government employees (except armed forces) who joined service on or after January 1, 2004.
Most States have also adopted the NPS as a mandatory benefit for their employees. Since May 1, 2009, the NPS has been available to every citizen on a voluntary basis, including corporates.
DPE has identified the list of CPSEs who are still not on board the NPS and letters have gone to their respective controlling ministry, sources added.
The last occasion when the DPE wrote to the administrative ministries/departments to bring the contents of the NPS to the notice of CPSEs under their administrative control for necessary action and guidance at their end was in February 2010.
NPS Assets
Meanwhile, aided by buoyant stock markets, the NPS assets under management (AUM) grew 27 per cent year-on-year to ₹ 11.89 lakh crore as of May 4 this year.
The overall AUM, including that of Atal Pension Yojana (APY), however, was only slightly up when compared to the end of March 2024 level of ₹ 11.73 lakh crore.
The number of new NPS and APY subscriber registrations till May 6 this year stood at 82,061, PFRDA data showed.
As of May 4, the number of subscribers in the non-government sector had grown 8.76 lakh year over year, while the increase in the government sector was just 7.14 lakh.
In 2023-24, as many as 9.47 lakh new subscribers onboarded NPS from the non-government sector. Of these 9.47 lakh new subscribers, 8.10 lakh were from the ‘all citizen model ‘ and 1.37 lakh were Corporate employees.
The overall robust growth in NPS assets in recent years has been driven by both buoyant equity markets and a widening NPS subscriber base as more working-age Indians take up retirement planning seriously.
The non-government sector — corporates and retail — saw a 37.89 per cent year-on-year growth in its NPS assets as of May 4 this year to ₹ 2.32 lakh crore. On the other hand, the the government sector’s NPS assets were up 24.45 per cent to ₹9.16 lakh crore.
The number of new government employees who onboarded NPS in fiscal 2023-24 stood at 7.10 lakh.
Equity returns sizzle
Roaring bull markets in equities have helped Pension Funds record a scorching average annual return of 33.03 percent as of May 3, surpassing Corporate Bonds by over fourfold, and outperforming Government Securities and State Government Schemes, according to the latest PFRDA data.
Over the past three years, Pension Funds achieved an average return of 19.02 per cent in equities, with returns since NPS inception coming in at 13.56 per cent for equity investments.
Data showed that as of May 3 this year, Corporate Bonds recorded annual return of 7.11 per cent, while Government securities saw a return of 7.14 per cent. The annual return from Central and State Government schemes stood at 10.15 and 10.14 per cent, respectively.
The total number of NPS and APY subscribers as of May 4 this year stood at 7.40 crore, up 16.31 per cent over 6.36 crore a year ago.
After its implementation in 2009, NPS took six years and six months to reach the milestone of ₹1 lakh crore AUM. It then took four years and 11 months to increase AUM further to ₹5 lakh crore.
NPS AUM had doubled to ₹ 10 lakh crore as of August 25 last year from ₹ 5 lakh crore in just 2 years and ten months.
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