Supratim Bandyopadhyay
Supratim Bandyopadhyay

The total assets under management of the National Pension System and the Atal Pension Yojana are approaching towards a corpus of Rs 5 lakh crore, Pension Fund Regulatory and Development Authority (PFRDA) chairman Supratim Bandyopadhyay said on Friday.

"Our total assets under management (AUM) as on September 12 was very close to Rs 5 lakh crore, it is Rs 4.93 lakh crore. Still, about 83 per cent of the total assets are from the central and state government employees," Bandyopadhyay said at the 22nd CII Insurance and Pensions Summit.

The total number of National Pension System (NPS) and Atal Pension Yojana (APY) subscribers is over 3.68 crore, as per the latest data.

Of them, under the NPS, as many as 21.25 lakh subscribers are central government employees with contribution of Rs 1.61 lakh crore to the AUM, while 48.74 lakh state government employees furnish more than Rs 2.48 lakh crore to the total corpus.

Besides, 10.40 lakh subscribers are from the corporate sector with AUM of Rs 50,696 crore. Under the all citizen model of NPS, there are 13.45 lakh customers who contribute Rs 16,218.81 crore to AUM; while under NPS Lite category, there are as many as 43.19 lakh subscribers with AUM of Rs 4,077 crore.

The corpus under the APY, which is mainly targeted to the employees in the unorganised sector, was Rs 12,883.73 crore as on September 12, 2020.

The total number of APY subscribers stood at 2.32 crore, which accounts for 62.82 per cent of the total customers under both the schemes put together.

"APY currently has pension provision of only between Rs 1,000 and Rs 5,000 per month at the age of 60 years. And most of the customers who are under APY are looking for Rs 1,000 pension per month that's why the corpus is of only Rs 12,880 crore. It has not gone up much," Bandyopadhyay said.

The PFRDA chairman further said there has been a good growth in new subscribers of the APY even during the lockdown period.

About 2 million new subscribers were added during the April-August period of this fiscal, and another over 4 lakh during these 15-16 days in September, taking the number of new additions to over 2.4 million so far, he claimed.

In India, less than 15 per cent of the working population has formal pension provision, so this is the target group which the PFRDA is also looking at and the APY has been doing quite well, the official said.

On the NPS, he said it is a very flexible market-linked pension product.

It may seem to be a single product but actually it is a bouquet of products under the garb of one product, he added.

"It is tax efficient, there are exclusive tax benefit which is not given to any other product. It is transparent and one can access it online as well as through the mobile app. One can also look at the charges, get account information online, change the fund managers as well as has the option of changing the instruments where to invest the corpus," Bandyopadhyay said.

He added the NPS is now gaining pace in the unorganised and corporate sector and this is where the PFRDA is focussing now because the central and state government employees are the captive customers who have to mandatorily subscribe to the scheme since its implementation in January 2004.

Further, he said the average returns in the market-linked NPS is around 10 per cent.

Talking about the issues, he said the increasing life expectancy is one of the biggest challenges for the pension industry.

"Life insurance companies which are providing annuity, they currently are facing it as we have very often said that the risk of living too long is now much more than the risk of dying early. The average mortality expectancy that we see at the age of 60 years is that a person will live for another 18-20 years. So that's very very difficult and that's very challenging," he said.

And there is every possibility that if a person is not carefully accumulating the retirement corpus, there is every likelihood that the person may run short of the corpus if he or she lives longer.

"On an average, an individual should have enough to live for two decades as one has to plan for 20 years post-retirement. And there is also need to create that kind of savings," the official said.

Bandyopadhyay also said that seeing NPS only from the perspective of a tax-friendly instrument would be a "wrong" understanding.

"I can tell you that NPS is the lowest cost pension plan across the board and a large part of the return (from the market) goes back to the customer only," Bandyopadhyay said.

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