Mumbai, Feb 22 India's pension assets under management (AUM) is expected to reach a massive Rs 118 lakh crore by 2030, with the National Pension System (NPS) likely to constitute approximately 25 per cent of this total, according to a new report.
The NPS private sector AUM has experienced substantial annual growth, increasing by 26.8 per cent over the last five years, from Rs 84,814 crore to Rs 2,78,102 crore.
This surge is anticipated to be fuelled by evolving Indian demographics and their subsequent effects.
India's elderly population is projected to increase 2.5 times by 2050, accompanied by a rising life expectancy rate post-retirement, averaging around 20 years, said the report by DSP Pension Fund Managers.
Currently, India's pension market is significantly under-penetrated, representing only 3 per cent of the country's GDP.
The retirement savings gap is expected to widen annually by 10 per cent, potentially reaching approximately $96 trillion by 2050.
Indian retail investors are increasingly transitioning from traditional savings methods to market-linked investments, demonstrated by a decline in reliance on cash and bank deposits from 62 per cent to 44 per cent over the past decade, the report mentioned.
New NPS registrations have seen a significant boost between fiscal years 2020 and 2024, with male subscribers increasing by 65 per cent and female subscribers by 119 per cent.
NPS Vatsalya, introduced in September 2024, has been well-received, attracting over 86,000 subscribers.
Looking ahead, the NPS private sector AUM is projected to exceed Rs 9,12,000 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 its citizens. We are very positive that our robust investment process will help us to be a significant player in this space,” said Rahul Bhagat, CEO, DSP Pension Fund Managers.
Key growth drivers include government tax reforms, the inclusion of NPS in both old and new tax regimes, tax benefits for parents contributing to NPS Vatshalya, the adoption of private sector fund managers among government employees, increased NPS uptake among younger generations (20–30 age group), and the integration of technology and AI in fund management.
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