Private sector started liking NPS seeing the high returns, 1.54 crore people are associated with the scheme
NPS Scheme: In the last financial year 2023-24, 9.12 lakh people from the private sector joined NPS, which is 15 percent more than the previous financial year. Currently, 1.54 crore people are associated with NPS including the government and private sector. NPS can be very helpful in providing pension facilities to senior citizens. Let us know in detail in this report.
The government plans to replace the 2004 National Pension System (NPS) with the Unified Pension Scheme (UPS) for political reasons, while the private sector is currently favoring NPS due to its high return rate and pension benefits for senior citizens.
9.12 lakh private sector employees joined NPS in the most recent fiscal year 2023–2024, a 15% increase over the previous fiscal year. Currently, NPS employs 1.54 crore people from the public and private sectors, comprising 60 lakh private sector workers and 94 lakh employees from the federal and state governments. In 2004, NPS was introduced for government employees, and five years later, in 2009, it was opened for the commercial sector.
In order to ensure that they continue to receive a significant pension after 60 years, the Pension Fund Regulatory and Development Authority (PFRDA) is currently getting ready to link an increasing number of private sector workers to NPS. PFRDA has set a goal to join 11 lakh private sector workers to NPS in the current fiscal year 2024–2025.
Currently, 11% of the population is over 60, and by 2050, that number will rise to almost 21%. For these individuals, NPS might be of great assistance in offering a suitable pension plan.
NPS's return rate is the primary reason why private sector workers who are aware of their pension are drawn to it. Over the past 20 years, the average equity return of NPS has been 14% annually, while the average equity return of pension funds has been 20% annually for the past three years.
The return on NPS's corporate bonds has been 7% over the past three years, while the return on government securities has exceeded 9%. Contributions from employees are invested in stocks, bonds, and equities under NPS, and the profits are utilised to establish individual employee funds. The overall NPS fund is on the verge of reaching 13 lakh crores, a 28% rise in the past year, thanks to strong returns.
Employees who join the NPS can use 40% of their whole fund to buy a lifetime pension for themselves and their spouses after they turn 60. They can receive a lump sum payment for the remaining 60%. An individual may continue to contribute to the NPS fund until they turn 75 if they so choose. Starting an NPS fund only requires an annual investment of Rs 1000.
Chitra Jaisimha has been appointed by PFRDA to serve as the NPS Trust Chairperson. The date of her appointment is October 17. Chitra spent the previous four years as a trustee for the NPS Trust. She has nearly twenty years of experience working in different insurance areas.
