South India leads in NPS enrolment; low insurance awareness a key challenge: Deepak Mohanty
South India currently has the highest number of National Pension System (NPS) private sector enrolments in the country, said Deepak Mohanty, Chairman, Pension Fund Regulatory & Development Authority (PFRDA).
Some 31% of private sector enrolments comprising NPS corporate and NPS All Citizen in the country so far this financial year were from the Southern region, he said.
“In the current fiscal, the region accounts for the highest NPS private sector enrolments in the entire country. Southern region’s share in enrolment in NPS Corporate in FY24 is 39% and for All Citizen it is 29%,” Mr. Mohanty said.
Also, some 36% of women participation in NPS Corporate subscriber base came from the Southern region, again highest in the country, he said.
Countrywide scenario
Commenting on the countrywide performance, he said, as on 10th January 2024, PFRDA has assets under management (AUM) worth ₹11 lakh crore as against the full financial year expectation of ₹12 lakh crore.
AUM has increased from ₹10 lakh crore to ₹11 lakh crore between August 2023 to 10 Jan 2024.
However, the addressable pension market in the country was so huge, he observed.
For instance, if pension assets could be measured as percentage of GDP, the current pension assets to GDP ratio of India is some 16.5%. The same ratio in developed countries like the U.K, the U.S. and Australia is beyond 100%. It was 81% in 2022 for OECD countries while some of the Scandinavian countries like Denmark, Iceland, Netherlands had a ratio over 200%.
One of the key challenges was lack of financial literacy and lack of general awareness about pension schemes among people. Also, financial literacy level among women was lower than men across the country.
“Western countries have a three-tier retirement/pension scheme wherein the government, employer and individuals have their own pension plans. In India, the majority of the people have no pension plan as it is not mandatory. Financial security will not come out of thin air, we have to plans and invest in advance. On a national level, women have only 20 to 21% exposure to NPS now, but the fact is women have a longer longevity,’‘ Mr. Mohanty observed.
To promote both the National Pension System and the Atal Pension Yojana, PFRDA is currently in the process of broadbasing the scope of the schemes by reaching out to smaller segments of communities, women, farmers and small entrepreneurs.
“India is a young nation and incomes are also on the rise and therefore buying pension products is easily possible. Other investments are no substitute for pension. We are focused on increasing awareness across the country. We work with intermediaries, deploy financial and retirement and retirement advisors, and also explore the power of digital channels to get the message across to people and get them enrolled,’‘ Mr. Mohanty added.
