Pension funds sizzle with a 16.94% 1-year equity return on NPS monies

Riding on a roaring bull market in equities this year, pension funds have clocked a robust average 16.94 per cent annual return in equities, latest PFRDA data showed.

This average annual return of 16.94 per cent in equities — as of December 8 this year — is more than double the return of about 7 per cent seen in Corporate Bonds; 7.10 per cent in Government Securities and about 8.2 per cent in Central and State Government Schemes, data showed.

Over the last three-year period, the seven pension funds have generated an average return of 18.27 per cent in monies deployed in equities. The average return from equities since inception of NPS stood at 13.01 per cent.

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Meanwhile, overall National Pension System (NPS) assets — including Atal Pension Yojana — surpassed a new milestone of ₹10.5-lakh crore, touching a level of ₹10.7-lakh crore as of December 9, up 25.95 per cent on a year-on-year basis. Of the total NPS AUM of ₹10.7-lakh crore, the total NPS monies parked in equities stood at about ₹1.9-lakh crore. 

On December 9 last year, NPS assets stood at ₹8.5-lakh crore.

PFRDA Chairman Deepak Mohanty has already expressed confidence that NPS assets will touch  ₹11-12 lakh crore by end March 2024.

Equity markets in India  have been on a roll in 2023 — especially in the last two months — on the back of strong domestic inflows from retail investors and also with Foreign Portfolio Investors (FPIs) returning to the markets in a big way as net buyers. 

So far in the first two weeks in December this year, FPIs have pumped in ₹43,000 crore in Indian equities, encouraged by the BJP’s win in three significant States of Rajasthan, Madhya Pradesh and Chhattisgarh in recent Assembly elections. Net inflows into equities from FPIs this calendar year stood at whopping ₹1.5-lakh crore. 

Positive outlook

Most analysts in the Street have strong outlook for equities in 2024 with many contending that ongoing bull run still has some distance to go given the robust macroeconomic situation and expectations of likely continuity of current dispensation in upcoming 2024 general elections. 

A Jefferies note on Asia Outlook 2024 recently highlighted that notwithstanding any big external shock, the current market multiples in India (Nifty at 18.8x 1 year forward) can sustain given the strong domestic flow. “We expect Nifty to hit new all time highs in 2024,” said Mahesh Nandurkar, Equity Analyst, and Abhinav Sinha, Equity Analyst at Jefferies in their 2024 Outlook: India Strategy note.

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India’s economic outlook is robust with 7 per cent multi-year GDP growth likely, as the broader capex cycle is in early stages. Foreign investor positioning is light and hence corrections will likely get bought into, it added.


The robust growth in NPS assets this fiscal was aided by strong show on the ‘Corporate’ and ‘all citizens model’ categories, which grew 35.55 per cent and 34.49 per cent, respectively. 

As many as 4.54 lakh new subscribers enrolled in NPS under these two categories in aggregate this fiscal. Of this 4.54 lakh new subscribers, as many as 3.60 lakh subscribers came in through ‘All Citizen Model’.

The total number of NPS and APY subscribers as of December 9 stood at 6.92 crore, up 16 per cent over 5.97 crore in year ago.

PFRDA, this fiscal year, expects at least 13 lakh new subscribers from both Corporates and all citizen categories. Last fiscal year, PFRDA had added a million new subscribers.

NPS took six years and six months to reach the milestone of ₹1-lakh crore AUM after its implementation in 2009. It then took 4 years and 11 months to further increase AUM to ₹5-lakh crore.  

NPS AUM had doubled to ₹10-lakh crore in August 2023 in a span of just 2 years and ten months.

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