The New Pension Scheme (NPS) for for all citizens of india introduced in May 2009, has generated an average return of 12% in the first year of its operations, outperforming most other long-term saving schemes such as the Employees’ Provident Fund and term deposits.The year-old scheme for All Citizens of India has a corpus of just Rs 10 crore with 6,000 subscribers as compared with the Employees Provident Fund (EPF) which
has over 4.5 crore subscribers with a corpus of over Rs 2,62,000 crore as on March 2009.
NPS corpus is managed by six different fund managers. The equity investments of the scheme have generated a 26% return. Performance of the six fund managers will soon be reviewed the official added. The returns on government securities and corporate bonds, however, have averaged just about 5% and 11%, respectively in the period, largely because of a lack of funds.
The new pension scheme corpus is equally divided amongst the six fund managers including SBI Pension Funds, UTI Retirement Solutions, IDFC Pension Funds, ICICI Prudential Pension Funds, Kotak Mahindra Pension Fund and Reliance Capital Pension Fund.The equity investments of the scheme have generated a 26% return. Performance of the six fund managers will soon be reviewed by PFRDA. The returns on government securities and corporate bonds, however, have averaged just about 5% and 11%, respectively in the period, largely because of a lack of funds.
With just 10 crores of General Public Corpus divided among 6 fund managers had a little choice making difficult to deploy directly in government securities or corporate bonds.
It will be interesting to see how this performance attracts new subscribers. In our earlier post I have already mentioned that this this the first ever social security toll introduced by govt of india for all its citizens. NPS gives the power to invest upto 50% in equities and when compared with charges of ULIP and mutual Fund, its just a fraction of that.
Considering the govt has already announced swavlamban scheme, where it will contribute Rs 1000 per year, it expects to attract big number of subscribers this year
