Average annual equity returns of the National Pension System (NPS) funds surged 34.27 per cent, exceeding corporate and government bonds and state government schemes, Business line reported, citing data from the Pension Fund Regulatory Development Authority (PFRDA).

The report said that as of March 1, 2024, average annual returns from equities jumped 34.27 per cent, corporate bonds recorded 8.48 per cent growth, government securities returned 10.5 per cent, while central and state governments gave 12.71 and 12.67 per cent, respectively.

Over the last three years, the average returns from equities were 17.7 per cent, and returns since the NPS inception were 13.56 per cent. Additionally, assets under management (AUM) in NPS and Atal Pension Yojana saw a 30 per cent annual growth to Rs. 11.50 lakh crore, of which equity allocations were Rs 2.1-lakh crore, according to the report. Also, the strong performance of NPS’s “corporate” and “all-citizens model” contributed to its substantial rise in AUM.

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NPS Subscriber Base Increased

As of March 1, 2024, NPS saw 7.92 lakh new members joining the scheme. The corporate model saw 1.23 lakh new subscribers, and the all-citizens model recorded 6.69 lakh new members. PFRDA has set the goal of adding one million new users by the end of March 2024.

Citing the American investment bank and financial services company, Jefferies, it said that India’s economy will rise from $4.5 trillion now (world’s fifth highest)to $10 trillion by 2030.

Finally, the positive outlook, development prospects and robust performance of the Indian equity market have raised hopes of investors. PFRDA Chairman Deepak Mohanty expects NPS assets could reach Rs 12-lakh crore by the end of March 2024, according to the report.

NPS offers investors various investing options through the active and auto modes. For example, in the active mode, the investor can decide the investment amount in each asset class under the NPS ecosystem, subject to the maximum upper limit. In the auto mode, they can choose the plan options, while the rest is handled by the empanelled fund managers selected by PFRDA.

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NPS offers two schemes: Tier 1 and Tier 2. The latter is allowed to open only if the person has a Tier 1 account. NPS invests in equity, government and corporate bonds, alternative investment instruments, etc. Investors can withdraw up to 60 per cent of the funds in a lump sum after retirement at 60, and they must invest the remaining amount in annuity. Both Indian and non-resident Indians can open an NPS account.