The growth of assets under management (AUM) in the National Pension System (NPS) has moderated to 20.3 per cent year-on-year, reaching ₹13.83 lakh crore as of March 1, latest PFRDA data showed. This slowdown comes amid a further decline in equity benchmarks in the second half of February, weighing on overall market-linked returns. Of the overall AUM of near ₹14 lakh crore, the sum deployed in equity schemes stood at about ₹3 lakh crore.
As of February 15, NPS overall AUM had touched ₹13.90 lakh crore, reflecting a higher 22.2 per cent year-on-year growth. However, market volatility in the latter part of the month contributed to the marginal dip in asset value.
Private sector NPS assets also saw a moderation in growth, rising 24.56 per cent year-on-year to ₹2.75 lakh crore as of March 1. This was slightly lower than the ₹2.78 lakh crore recorded on February 15, which had marked a 28 per cent annual growth.
Despite the slowdown in AUM expansion, NPS continues to see strong traction in subscriber additions. In a key milestone, private sector NPS subscribers have crossed the one-million mark in the ongoing fiscal year, supported by the onboarding of over one lakh Vatsalya subscribers. Till March 1, the total number of new subscribers under NPS and Vatsalya stood at about 12 lakh. In contrast, total new enrolments in the entire 2024-25 fiscal year stood at 9.48 lakh.
Launched in 2004, NPS has witnessed steady expansion, driven by increasing participation from both government and private sector employees. The post-COVID years saw accelerated growth, with the AUM clocking a compounded annual growth rate of nearly 30 per cent. As of mid-December 2024, NPS assets had exceeded ₹13.8 lakh crore, marking a robust 28 per cent year-on-year growth.
While recent market corrections have impacted short-term growth, the long-term expansion of the NPS remains strong, supported by rising financial awareness and increasing voluntary participation from private sector employees and self-employed individuals.
Between April 1, 2024 and March 1 this year, the number of new corporate category subscribers stood at 3.3 lakh, while the All Citizen Model saw a little over 7.7 lakh new subscribers. Going by this trend, the overall number of new NPS subscriber enrolments this fiscal is likely to comfortably exceed 1.3 million, sources said.
NPS has generated robust returns for the non-government sector since inception.
Private sector NPS had grown much faster between March 2020 to March 2024 at 25 per cent as opposed to 8 per cent growth seen in government sector.
Private sector employees have found NPS to be an attractive proposition and, therefore, one could see robust growth. The private sector AUM has grown 25 per cent, while the government sector has grown 19 per cent, although the overall AUM of the government sector in absolute terms is much higher at ₹ 10.6 lakh crore.
- Also read: NPS equity annual returns slide to 10.89 per cent as of Feb 1
Annual Equity Returns Fall
Meanwhile, a 16 per cent drop in equity benchmarks since October 2024, driven by a sharp corporate earnings slowdown and heavy FPI outflows linked to the “Trump Trade,” has dulled Indian equities, dragging NPS annual equity returns to 1.21 per cent as of March 1, latest PFRDA data showed.
However, since inception, the return on equity schemes stood at a robust 12.35 per cent. The average returns for the last three years stood at 12.28 per cent.
This annual equity return of 1.21 per cent is substantially lower than the average 8.41 per cent return that NPS monies deployed in corporate bond scheme generates. It is also lower than the average 7.2 per cent annual return from NPS monies deployed in Central Government or State Government schemes.
This sharp decline in NPS returns marks a steep fall from the nearly 40 per cent annual return recorded on September 28, 2024, when Indian equity indices hit an all-time high. The slide began soon after, with returns dropping to 30 per cent by November 10, 26.6 per cent by November 30, 24.37 per cent by December 14, further to 15.86 per cent by December 27 and to 10.89 per cent as of February 1.
While Nifty50 reached a lifetime high of 26,277.35 on September 27 last year, Sensex had on the same day hit a record peak of 85,978 on the same day.
