PFRDA Targets ₹100 Lakh Crore NPS Corpus by 2040, Focuses on Digital Enrolments

The Pension Fund Regulatory and Development Authority (PFRDA) is targeting an assets under management (AUM) of ₹100 lakh crore under the National Pension System (NPS) by 2040.  

As per news reports, the regulator plans to increase enrolments through banks and the Unified Payments Interface (UPI), using existing banking and payment networks to reach more subscribers. 

NPS Assets Cross ₹18 Lakh Crore 

NPS currently has an AUM of more than ₹18 lakh crore, PFRDA Chairman S Ramann said at the 'Tatkal NPS: Advancing Digital Pension Inclusion' conference. 

Ramann said the projected ₹100 lakh crore corpus reflects the growing requirement for long-term savings in the country. The regulator's focus is on increasing participation beyond the growth that the pension market would achieve on its own. 

Banks to Become Key Distribution Channel 

PFRDA is working with the National Payments Corporation of India (NPCI) to connect UPI platforms with banks for NPS enrolment. The proposed system will allow customers to start opening pension accounts through existing digital banking and payment channels. 

The process will use details such as mobile numbers and dates of birth, along with existing bank account mapping infrastructure. Customers can begin their NPS investment with an initial contribution of ₹250. 

According to Ramann, banks will not incur additional customer acquisition costs under this arrangement, as enrolments can be handled through existing digital systems without deploying substantial additional staff or infrastructure. 

The regulator has also reported changes in the economics of pension distribution. Revenues of the top 10 Points of Presence (POPs) have increased four to five times following changes to the commission structure introduced from January 1. 

Changes in Investment Options 

PFRDA is considering different investment choices based on subscribers' financial requirements and risk appetite. Schemes with up to 100% equity exposure are being considered for investors who can manage higher market risks.  

For informal-sector workers, the regulator is looking at options with around 25% equity allocation. It is also encouraging subscribers to defer annuity purchases after retirement if they do not immediately need the income. 

Pension Funds Investment in Infrastructure 

The regulator is looking to increase pension fund investments in unlisted equity, project finance, and greenfield and brownfield infrastructure projects. The NPS Bharat Fund of Funds has been launched, with two initial sanctions involving alternative investment funds. 

Pension funds already have exposure to real estate investment trusts (REITs) and infrastructure investment trusts (InvITs). Greater participation in infrastructure financing could also reduce reliance on banks for long-term project funding. 

Read More: PFRDA Revises NPS Scheme Naming Format and Clarifies Display Rules for PoP Platforms! 

Conclusion 

PFRDA's plans cover pension distribution, investment choices and infrastructure financing. The regulator is targeting an NPS corpus of ₹100 lakh crore by 2040, against the current AUM of more than ₹18 lakh crore. 

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