February 22nd 2025.
In a recent report, it was revealed that India's pension assets under management are expected to reach a whopping Rs 118 lakh crore by 2030. This is a significant increase from the current level, with the National Pension System (NPS) projected to make up about 25% of this total amount. The private sector NPS has also seen a remarkable growth in the last five years, with a staggering increase of 26.8% from Rs 84,814 crore to Rs 2,78,102 crore.
Experts predict that this surge in the pension market can be largely attributed to the changing demographics of India. The number of elderly citizens is expected to grow by 2.5 times by 2050, along with a rise in life expectancy post-retirement, averaging around 20 years. This information was shared in a report by DSP Pension Fund Managers, who also highlighted that the current pension market in India is under-penetrated, accounting for only 3% of the country's GDP.
Furthermore, it is estimated that the retirement savings gap will increase by 10% annually, potentially reaching a staggering $96 trillion by 2050. This has prompted many retail investors in India to shift from traditional savings methods to market-linked investments. The report also noted a decline in reliance on cash and bank deposits, from 62% to 44%, over the past decade.
In the past few years, there has been a significant increase in new NPS registrations, with male subscribers rising by 65% and female subscribers by 119%. The introduction of NPS Vatsalya in September 2024 has also been well-received, with over 86,000 subscribers. Looking ahead, experts predict that the private sector NPS AUM will surpass Rs 9,12,000 crore and have over 15 million subscribers in the next five years.
CEO of DSP Pension Fund Managers, Rahul Bhagat, believes that India's pension market is on the brink of rapid evolution. He stresses the importance of implementing the right policies and increasing awareness to unlock significant value for citizens. He also expressed confidence in their investment process to make them a major player in this space.
The report also highlighted key factors driving the growth of the pension market in India, including government tax reforms, NPS being included in old and new tax regimes, tax benefits for parents contributing to NPS Vatshalya, and the adoption of private sector fund managers among government employees. Additionally, the younger generation's increasing uptake of NPS and the integration of technology and AI in fund management are also expected to contribute to this growth.
[This article has been trending online recently and has been generated with AI. Your feed is customized.]
[Generative AI is experimental.]
