New Delhi [India], October 2 : India's National Pension System (NPS) has emerged as a high-performing and cost-effective retirement planning tool, delivering over 13 per cent average annual returns in its equity schemes since inception, Finance Minister Nirmala Sitharaman said while addressing the NPS Diwas conference on 'Inclusive Pensions, Innovative Solutions: Strengthening Retirement Security in India' organized by Pension Fund Regulatory and Development Authority (PFRDA) in New Delhi.
Other investment options under NPS have also posted robust long-term returns: around 9 per cent annually for both corporate debt and government securities schemes, making NPS one of the most attractive pension products in the world.
"The schemes under NPS have generated attractive returns. The average annual returns since inception under the equity scheme have been over 13 per cent, and around 9 per cent for both Corporate Debt and Government Securities schemes," Sitharaman said
The minister emphasized that these strong returns, combined with the system's low cost, portability, and flexibility, make NPS a cornerstone of retirement security for all Indians, not just government employees.
Introduced in 2004 by the then NDA government, NPS marked a crucial shift from a defined-benefit (DB) model to a defined-contribution (DC) framework, making pension planning more sustainable.
What began as a reform for government employees has now evolved into a universal retirement tool, accessible to all citizens, including the private sector and self-employed individuals.
"NPS transformed retirement planning from a government-sector privilege into a universal tool for financial security," Sitharaman added.
NPS is also among the lowest-cost pension fund management schemes globally. The low charges ensure that more of the subscriber's money stays invested and compounds over time. Moreover, its structure is regulated, transparent, and designed for seamless mobility.
"Whether there's a job change, relocation, or transition to self-employment, the pension account remains the same," said the Finance Minister. "NPS offers flexibility and choice."
A subscriber can keep their NPS account active with a minimum annual contribution of just Rs 1,000, and monthly contributions are not mandatory, offering flexibility that caters to informal and gig economy workers as well.
In 2024, the NPS platform was upgraded to enhance the Direct Remittance (D-Remit) facility, allowing subscribers to receive same-day Net Asset Value (NAV) for their contributions. This prevents loss of potential market gains due to processing delaysespecially crucial in fast-moving markets.
"This eliminates the risk of losing out on potential gains due to processing delays in a rising market," Sitharaman said.
As India targets becoming a developed nation by 2047, a secure, pensioned society is seen as essential. NPS helps relieve financial pressure on younger generations and ensures dignified aging for senior citizens.
"As India moves with purpose toward Viksit Bharat @ 2047, every citizen can envision financial dignity in old age," said the Finance Minister, adding that pensions provide a sense of security in old age. They strengthen households, ease pressure on working-age children, and channel long-term savings into national priorities.
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