By 2030, India’s pension AUM is expected to reach Rs 118 lakh crore, with NPS accounting for 25% of that amount

By 2030, India’s pension AUM is expected to reach Rs 118 lakh crore, with NPS accounting for 25% of that amount Theindiaprint | 2025-02-22T14:27:14+08:00

February 22, Mumbai According to a recent research, the National Pension System (NPS) is anticipated to account for over 25% of India’s pension assets under management (AUM), which is projected to reach an astounding Rs 118 lakh crore by 2030.

Over the last five years, the NPS private sector AUM has grown significantly, rising from Rs 84,814 crore to Rs 2,78,102 crore, or 26.8% annually.

It is expected that changing Indian demography and the ensuing consequences would drive this increase.

According to a survey by DSP Pension Fund Managers, India’s old population is expected to grow 2.5 times by 2050, and post-retirement life expectancy would also rise, averaging around 20 years.

With barely 3% of the nation’s GDP coming from the pension market, India is now severely under-penetrated.

It is anticipated that the retirement savings gap would increase by 10% a year, with the potential to reach over $96 trillion by 2050.

According to the survey, over the last ten years, the percentage of Indian retail investors who rely on cash and bank deposits has decreased from 62% to 44%, indicating a growing shift away from conventional savings techniques and toward market-linked investments.

Between fiscal years 2020 and 2024, there was a notable increase in new NPS registrations, with male subscribers rising by 65% and female subscribers by 119%.

Since its September 2024 launch, NPS Vatsalya has garnered positive feedback and amassed a subscriber base of over 86,000.

Over the next five years, it is anticipated that the NPS private sector AUM would surpass Rs 9,12,000 crore and have more than 15 million participants.

“With the correct rules and more knowledge, we think India’s pension market, which is poised for fast evolution, has the potential to unleash substantial wealth for its population. “Our strong investment process will enable us to be a major player in this market,” said Rahul Bhagat, CEO of DSP Pension Fund Managers.

Government tax reforms, the inclusion of NPS in both the old and new tax regimes, tax benefits for parents who contribute to NPS Vatshalya, government employees’ adoption of private sector fund managers, the rise in NPS uptake among younger generations (20–30 age group), and the incorporation of technology and artificial intelligence (AI) in fund management are some of the major growth drivers.