Over the last few years, there has been a rapid rise in equity market investors. But there is still a lot of ground to cover as far as pension planning goes, feel fund managers.
According to DSP Pension Fund Managers, India's pension market is significantly under-penetrated at 3 per cent of the GDP. In comparison, it is 31.3 per cent in Japan, 98.3 per cent in the USA and 146.2 per cent in Australia.
It estimates the retirement savings gap (desired retirement income minus actual income) in India will grow annually by 10 per cent to touch $96 trillion by 2050.
DSP sees a huge growth opportunity for the National Pension System here. By 2030, it sees total pension assets under management touching Rs 118 lakh crore with NPS expected to constitute around 25 per cent.
In the last few years, there has been a steady growth in NPS assets under management as well as the number of subscribers.
According to NPS Trust, in the 2024-25 financial year (up to January 31, 2025) the total AUMs have touched almost Rs 13.46 lakh crore, compared with Rs 11.37 lakh crore in 2023-24. The total number of subscribers has touched 1.94 crore as of January 31, 2025, from 1.73 crore in the previous financial year.
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The NPS private sector AUM has risen nearly 27 per cent annually over the past five years to Rs 2.78 lakh crore from Rs 84,814 crore, pointed DSP. Between the financial years 2020 to 2024, male subscribers rose 65 per cent, while female subscribers surged 119 per cent. The NPS Vatsalya scheme introduced for children in September 2024 has also attracted more than 86,000 subscribers, it said.
DSP expects NPS private sector AUM to exceed Rs 9.12 lakh crore with over 15 million subscribers within the next five years.
"We believe that India's pension market is at the cusp of evolving rapidly, and with the right policies and increased awareness, it has the potential to unlock significant value for citizens," said Rahul Bhagat, CEO, of DSP Pension Fund Managers.
Inclusion of NPS in old and new tax regimes (in new regime exemption is given to contributions made to NPS by employer), and tax benefits for parents contributing to NPS Vatsalya, are among key drivers of growth, feels DSP.
Last year the PFRDA (Pension Funds Regulatory and Development Authority) launched the Balanced Life Cycle fund for NPS subscribers. This will also help garner more interest in NPS, believes DSP.
It says the uptake of NPS is increasing among 20-30 age groups. The adoption of technology and AI (artificial intelligence) in the space of fund management, customer onboarding and servicing will be a major breakthrough.
Currently, there are 11 pension fund managers. DSP is among the newer fund managers, amassing Rs 1,500 crore in AUM within 13 months of operations.
