The Pension Fund Regulatory and Development Authority (PFRDA) Chairman, Deepak Mohanty, recently made a significant announcement that the combined Asset Under Management (AUM) of the National Pension System (NPS) and Atal Pension Yojana (APY) has crossed an impressive figure of Rs 10 lakh crore. This remarkable feat signifies the rapid growth and increasing popularity of these pension schemes.
Doubling in Less than Three Years
To put this achievement into perspective, it took just two years and ten months for the AUM to double from Rs 5 lakh crore to Rs 10 lakh crore. This exponential growth is a testament to the effectiveness and attractiveness of NPS and APY as retirement planning options for individuals across India.
APY and NPS Lite Contributions
Breaking down the numbers, the AUM under APY stood at Rs 30,051 crore at the end of August 25, while NPS Lite, another variant of NPS, reached an AUM of Rs 5,157 crore. These figures underscore the diversity and inclusivity of pension planning options available to individuals, catering to a wide range of financial needs and preferences.
The popularity of NPS and APY is also reflected in the growing number of subscribers. The total number of subscribers under these schemes now stands at more than 6.62 crore. This increasing participation indicates a growing awareness among the Indian population about the importance of planning for retirement.
Evolution of NPS and APY
The National Pension System (NPS) was introduced for all government employees (excluding the armed forces) joining the central government on or after January 1, 2004. Over time, most state and union territory governments have also adopted NPS for their new employees. NPS was made available to every Indian citizen on a voluntary basis from May 1, 2009, democratizing access to a structured retirement planning platform. On June 1, 2015, the Atal Pension Yojana (APY) was launched, further extending the reach of pension benefits to a wider section of the population.
Systematic Withdrawal Plan on the Horizon
Looking ahead, the PFRDA is planning to introduce a systematic withdrawal plan that will provide flexibility to pension account holders to withdraw a lump sum fund as per their choice upon reaching the age of 60. This plan is expected to be implemented from October or November.
Currently, NPS subscribers can withdraw up to 60% of their retirement corpus as a lump sum, while the remaining 40% is used to purchase an annuity. The systematic withdrawal plan will allow subscribers to opt for periodic withdrawals, whether monthly, quarterly, half-yearly, or annually, until the age of 75.
The remarkable growth of NPS and APY’s AUM to over Rs 10 lakh crore signifies the growing emphasis on retirement planning and financial security among the Indian population. These schemes continue to evolve to provide greater flexibility and benefits to subscribers, further reinforcing their importance in the financial landscape of the country.