South India Takes Lead in NPS Enrolment Amidst Nationwide Challenges

Context

Chairman of the Pension Fund Regulatory & Development Authority (PFRDA) highlights the dominance of South India in National Pension System (NPS) enrolments.

Key Information

During the current fiscal year, South India has emerged as the frontrunner in NPS private sector enrolments, encompassing both NPS Corporate and NPS All Citizen categories.
The region contributes significantly, with 39% of enrolments in NPS Corporate and 29% in NPS All Citizen.
Moreover, 36% of women participating in the NPS Corporate subscriber base hail from the Southern region, marking the highest percentage nationwide.

Need for Broadening Pension Awareness:

Commendable increase in assets under management (AUM) from ?10 lakh crore to ?11 lakh crore between August 2023 and January 10, 2024.
Still there is a vast untapped potential in the pension market.
The pension assets to GDP ratio in India is currently 16.5%, compared to over 100% in developed countries.
Lack of financial literacy and awareness about pension schemes, especially among women, remains a significant challenge.

Countrywide Scenario:

Western countries adopt a three-tier retirement/pension scheme involving the government, employers, and individuals.
In contrast, India lacks a mandatory pension plan for the majority of its population.
Financial security requires proactive planning and investment.
While women in India currently have only a 20 to 21% exposure to the NPS, their longer life expectancy makes pension planning crucial.

PFRDA Initiatives:

PFRDA is working towards broadening the scope of the National Pension System and the Atal Pension Yojana.
The focus is on reaching smaller communities, women, farmers, and small entrepreneurs.
Recognizing India's youthful demographic and rising incomes, PFRDA aims to increase awareness through collaborations with intermediaries, financial advisors, and leveraging digital channels for efficient communication and enrollment.