NPS sees manifold increase in AUM, subscribers since 2010

Backed by a robust institutional architecture, the NPS (National Pension System) has registered a substantial growth over the last more than six years, a senior official of regulator PFRDA said today.

"From a meagre AUM of Rs 4,679 crore as on March 2010, the NPS grew substantially to Rs 1,18,801 crore as on March 2016 and further to Rs 1,61,016 crore as on December 2016," PFRDA's outgoing whole-time member (finance) R V Verma said.

"The number of subscribers has also grown substantially during this period - to 141.88 lakh from 7.76 lakh (in March 2010)," he told PTI.

However, he said, a significant share is that of the Government sector, both Central and State employees, who account for nearly 88 percent of the total AUM and 35 percent of the number of subscribers.

Citing the reason, he said NPS, regulated by PFRDA, is still not the first choice for the private and corporate sector employees.

Though the Government, through its policies and stated objectives, has signalled the potential to expand the scope and coverage of NPS, the inequitable tax treatment vis-a-vis other retirement funds such as EPF and PPF has limited the expansion of NPS and its inroad into the private/corporate sector, Verma said.

Government, in its budgetary announcements, has made progressive changes in the NPS tax treatment and clearly signalled NPS as the ultimate destination for all segments of the population. These have included tax exemption on lumpsum withdrawal up to 40 percent and the intent of the Government to shift EPFO subscribers to the common NPS platform.

Going forward, these are bound to show good outcomes as the required administrative and legislative processes are underway, the PFRDA official said.

According to Verma, in the long run, PFRDA's role should extend to cover all retirement benefits, including the provident funds, superannuation funds and various other retirement schemes by whatever name they are called.

This will serve twin benefits of bringing all retirement funds under one central regulator and management of funds by professional managers under a common and unified investment guidelines, he said.

This will also imply better economy of scale in terms of investment returns, risk management and efficient regulations. A unified code of conduct and regulation will also help mitigate regulatory arbitrage within the otherwise fragmented industry, Verma said.

The Atal Pension Yojana (APY), announced in August 2015, has seen good traction with the number of subscribers at nearly 40 lakh as on December 2016. As a hybrid scheme, it combines contribution with guarantee of a minimum pension amount ranging from Rs 1,000 to Rs 5,000 per month.