The sustained “Trump trade” in global stock markets (shifting from emerging markets to the US) since early-November last year, coupled with a correction in Indian equity benchmarks, has significantly eroded NPS annual returns on equity investments, which have now dropped further to 10.89 per cent as of February 1, according to the latest Pension Fund Regulatory and Development Authority (PFRDA) data.
Benchmarks have declined over 10 per cent since late-September, driven largely by weak Q2 and Q3 corporate earnings amid slowing economic growth.
This sharp decline in NPS returns marks a steep fall from the nearly 40 per cent annual return recorded on September 28, 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 pe rcent by November 30, 24.37 per cent by December 14, and further to 15.86 per cent by December 27.
Foreign portfolio investors (FPIs) have net sold about $10 billion in equities this calendar year.
Both Sensex and Nifty50 have, till date, fallen over 10 per cent from their record-high in September, sending investors in a tizzy. While Nifty50 reached a life-time high of 26,277.35 on September 27, Sensex had, on the same day, hit a record peak of 85,978.
Overall NPS assets under management (AUM) growth pace, too, further moderated at 23.33 per cent year on year at ₹13.88 lakh crore. This growth pace is lower than the 25.49 per cent year-on-year growth recorded as of December 28 to touch ₹13.69 lakh crore. The NPS assets AUM grew a robust 27.34 per cent on a year-on-year basis as on December 14 to touch ₹13.71 lakh crore.
As of end-September, overall NPS assets stood at ₹13.40 lakh crore, up 32 per cent on a year-on-year basis.
Although average annual equity scheme returns moderated since end-September, it was much higher than the 9.76 per cent in Central government scheme and 9.88 per cent in State government scheme. Average return generated by Pension Funds for Atal Pension Yojana in the last one year stood at 9.96 per cent, while the return was 9.08 per cent since inception.
Prior to October 2024, riding on buoyant equity markets, the NPS monies parked in pure equities had given astronomical returns as high as 40 per cent.
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 13.07 per cent, corporate debt 9.11 per cent and government securities 8.79 per cent.
Private sector AUM
Private sector NPS assets growth, too, moderated as of February 1, clocking year-on-year increase of 29.90 per cent at ₹2.78 lakh crore. This is lower than the 33.33 per cent y-o-y growth at ₹2.74 lakh crore as of December 28 and 36.40 per cent y-o-y growth at ₹2.77 lakh crore as of December 14.
As of end-October, it was ₹2.70 lakh crore, up 44.52 per cent on a year-on-year basis.
The number of NPS subscribers in the non-government sector (private sector) — including the newly-launched Vatsalya scheme — saw an impressive growth, with a 22.38 per cent year-on-year rise to 64.28 lakh, latest data from the PFRDA showed.
The private sector’s strong NPS assets growth of near 30 per cent has substantially outpaced the government sector’s 21.7 per cent year-on-year growth, albeit on a much higher base.
Government sector (Centre and State governments) NPS assets touched ₹10.62 lakh crore as of February 1, PFRDA data showed. This was higher than the ₹10.23 lakh crore AUM as of end-September.
Corporate sector NPS
Corporate-sector related NPS continued to show robust growth in AUM at ₹2.08 lakh crore as of February 1 (₹1.58 lakh crore as of February 3, 2024). The ‘All Citizen Model’ (basically individuals) assets grew a robust 26 per cent to ₹70,144 crore (₹55,764 crore).
The number of subscribers in the corporate sector (employees of companies who have signed up) stood at 22.35 lakh, while there are 41 lakh subscribers in ‘All Citizen Model’.
