Synopsis
India's pension assets are set to soar to Rs 118 lakh crore by 2030, with the NPS expected to account for 25% of this total. The private sector AUM has seen tremendous growth, driven by changing demographics and increased awareness among investors.Key Takeaways
- Pension AUM in India projected to reach Rs 118 lakh crore by 2030.
- NPS expected to constitute 25% of total pension AUM.
- Private sector AUM grew by 26.8% in the last five years.
- Retirement savings gap may hit $96 trillion by 2050.
- NPS subscriber growth is significant, especially among women.
Mumbai, Feb 22 (NationPress) India's pension assets under management (AUM) are projected to soar to an astonishing Rs 118 lakh crore by 2030, with the National Pension System (NPS) expected to comprise around 25 percent of this figure, as per a recent report.
The NPS private sector AUM has witnessed remarkable annual growth, rising by 26.8 percent over the past five years, from Rs 84,814 crore to Rs 2,78,102 crore.
This growth is anticipated to be driven by changing demographics in India and their resulting impacts.
The nation's elderly population is forecasted to increase 2.5 times by 2050, coupled with a growing average life expectancy post-retirement of about 20 years, according to the report from DSP Pension Fund Managers.
Currently, India's pension market is significantly underdeveloped, representing merely 3 percent of the country’s GDP.
The retirement savings deficit is projected to expand annually by 10 percent, potentially hitting around $96 trillion by 2050.
Retail investors in India are progressively shifting from conventional savings to market-linked investments, as evidenced by a drop in dependency on cash and bank deposits from 62 percent to 44 percent over the last decade, the report noted.
New NPS registrations have surged significantly between fiscal years 2020 and 2024, with male subscribers increasing by 65 percent and female subscribers by 119 percent.
NPS Vatsalya, launched in September 2024, has gained traction, attracting over 86,000 subscribers.
Looking forward, the NPS private sector AUM is expected to surpass Rs 9,12,000 crore with an excess of 15 million subscribers in the next five years.
“We believe that India’s pension market is on the brink of rapid transformation, and with appropriate policies and heightened awareness, it has the potential to generate substantial benefits for its citizens. We are optimistic that our strong investment strategy will position us as a key player in this sector,” stated Rahul Bhagat, CEO of DSP Pension Fund Managers.
Key growth catalysts include government tax reforms, the integration of NPS into both old and new tax frameworks, tax incentives for parents contributing to NPS Vatshalya, the rising adoption of private sector fund managers by government employees, increased NPS acceptance among younger generations (ages 20–30), and the incorporation of technology and AI in fund management.