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India’s pension schemes’ AUM inch up as subscribers flock in

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India's pension schemes' AUM inch up as subscribers flock inBy Rohit Vaid (IANS): India’s state-run pension schemes bucked the Covid-19 induced downtrend as the pandemic triggered an upsurge in new enrolments and sustained contributions.

Assets Under Management (AUM) of schemes administered by India’s pension fund regulator inched up on a year on year basis in FY21 to around Rs 560 crore.

The Pension Fund Regulatory and Development Authority (PFRDA) oversees the National Pension System (NPS) and the Atal Pension Yojana (APY).

In a conversation with IANS, PFRDA Chairman Supratim Bandyopadhyay said: “It is Covid that has made all of us think and realise the importance of savings. The one important lesson that Covid has taught is not just to think about today but to plan for the future as well.”

“Extreme situations can arise anytime and it is very important to be financially secure in today’s day and age.”

According to Bandyopadhyay, the anxiety over financial security due to Covid led new subscribers to join the NPS due to its low cost and tax benefits.

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On the growth of the AUM, he said: “From FY20 to FY21, the growth percentage is just about one per cent higher, as the first quarter of 2020-21 was a very low time for the market, when equities fell about 15 per cent, facing a huge turmoil driven by the uncertainty.”

“However, the growth on a month on month basis — March 2020 on March 2021 — is over 34 per cent (provisional) which is far better.”

Besides, the number of subscribers under the various schemes rose to 414.70 lakh by February-end 2021 from 340.34 lakh during the corresponding period of last year showing YoY increase of 21.85 per cent.

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Furthermore, he cited that stock market correction as one of the main reasons for a lower year-on-year growth.

“Post budget, there was a euphoria in the equity markets. Now, there has been massive correction from the high point in Nifty, we have seen more than two and a half per cent correction.”

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“After the budget presentation, when the government borrowing plan was there on the table, the yields of government bonds and corporate bonds went up by almost 45-50 basis points. That’s a huge rise. Almost 80 per cent of our total investment is in fixed income market other than equity.”

In addition, he pointed out that high stock valuations remain a concern.

The PFRDA is the statutory authority established by an enactment of Parliament, to regulate, promote and ensure orderly growth of the NPS and pension schemes to which this Act applies.

The NPS was initially notified for the Central government employees recruited from January 1, 2004 and subsequently adopted by almost all the state governments for its employees.

It was later extended to all Indian citizens on a voluntary basis and to corporates for its employees.

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