New Delhi: India’s National Pension System (NPS) has established itself as a high-performing and cost-effective retirement planning tool, delivering over 13% average annual returns in its equity schemes since inception, Finance Minister Nirmala Sitharaman said at the NPS Diwas conference on “Inclusive Pensions, Innovative Solutions: Strengthening Retirement Security in India”, organized by the Pension Fund Regulatory and Development Authority (PFRDA) in New Delhi.
Other NPS investment options have also delivered strong long-term returns, with corporate debt and government securities schemes averaging around 9% annually, making NPS one of the most attractive pension products globally.
“The schemes under NPS have generated attractive returns. The average annual returns since inception under the equity scheme have been over 13%, and around 9% for both Corporate Debt and Government Securities schemes,” Sitharaman noted.
The Finance Minister highlighted that these strong returns, combined with the system’s low cost, portability, and flexibility, make NPS a cornerstone of retirement security for all Indians—not just government employees.
Introduced in 2004 by the then NDA government, NPS marked a shift from a defined-benefit (DB) to a defined-contribution (DC) framework, creating a more sustainable model for pension planning.
“NPS transformed retirement planning from a government-sector privilege into a universal tool for financial security,” Sitharaman added.
Over time, what started as a reform for government employees has evolved into a universal retirement solution, accessible to private-sector workers and the self-employed as well. NPS is also among the lowest-cost pension fund management schemes globally, ensuring that more of the subscriber’s money stays invested and compounds over time. Its regulated and transparent structure also supports seamless mobility.
“Whether there’s a job change, relocation, or transition to self-employment, the pension account remains the same,” the Finance Minister said. “NPS offers flexibility and choice.”
Subscribers can maintain their NPS account with a minimum annual contribution of just ₹1,000, with no mandatory monthly deposits, making it suitable for informal and gig economy workers.
In 2024, the NPS platform was upgraded to enhance the Direct Remittance (D-Remit) facility, allowing subscribers to receive same-day Net Asset Value (NAV) for contributions. This upgrade prevents loss of potential market gains due to processing delays, which is particularly important in fast-moving markets.
“This eliminates the risk of losing out on potential gains due to processing delays in a rising market,” Sitharaman said.
As India pursues the goal of becoming a developed nation by 2047, a secure, pensioned society is viewed as essential. NPS helps reduce financial pressure on younger generations while ensuring dignified aging for senior citizens.
“As India moves with purpose toward Viksit Bharat @ 2047, every citizen can envision financial dignity in old age,” the Finance Minister said, noting that pensions strengthen households, ease pressure on working-age children, and channel long-term savings into national priorities.
