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Business News/ Money / Personal Finance/  Allocation to NPS slows down in June quarter
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Allocation to NPS slows down in June quarter

Withdrawal has happened from all sectors, across government and private firms
  • Due to covid‘s effect on firms and the desperation to conserve cash, the growth in the overall NPS sector has remained flat in terms of the number of investors
  • Due to covid‘s effect on firms and the desperation to conserve cash, the growth in the overall NPS sector has remained flat in terms of the number of investorsPremium
    Due to covid‘s effect on firms and the desperation to conserve cash, the growth in the overall NPS sector has remained flat in terms of the number of investors

    Against the backdrop of widespread job losses and economic distress, the number of private sector firms contributing to the National Pension System (NPS) grew at a slower pace in the June quarter than a year before, even as withdrawals rose.

    According to HDFC Pension Management Co., one of the largest fund managers of NPS by assets under management, the number of companies contributing to NPS rose 8.24% to 497,000 during the quarter, against a 11.86% growth seen a year ago. “Outflows in NPS is around 2.5% of inflows. All kinds of customers are withdrawing for medical reasons, children’s education, etc., and we do not see any other trend," said Sumit Shukla, chief executive of HDFC Pension Management Co.

    “The overall inflow in April-July has been satisfactory, but withdrawals, too, have happened, which, in absolute terms, is low; but it is higher than last year," said S. Bandyopadhyay, chairman of Pension Fund Regulatory and Development Authority of India (PFRDA), which regulates NPS. According to the Centre for Monitoring Indian Economy, India’s urban unemployment rate stood at 9.15% in July, against 12.02%, 25.79% and 24.95%, respectively in the previous three months.

    “In April-July period, withdrawal has been around 62 crore. The total inflow in the period is about 30,000 crore. Withdrawal has happened from all sectors, across government and private firms. This is also because of the launch of covid special partial withdrawal scheme in NPS, which was allowed by us to enable customers to withdraw up to 25% from their funds invested with us. Last year, the withdrawals were lower during April-July. In EPFO, about 33,000 crore was withdrawn," said Bandyopadhyay.

    Due to covid‘s effect on firms and the desperation to conserve cash, the growth in the overall NPS sector has remained flat in terms of the number of investors.

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    ABOUT THE AUTHOR
    Anirudh Laskar
    Anirudh Laskar is a senior editor at Mint, with 17 years of experience. He has reported on significant corporate matters including large mergers and acquisitions, India's emerging e-commerce sector and regulatory issues in the financial services industry. Based out of Mint’s Mumbai bureau, Anirudh has worked with Business Standard and The Telegraph before joining Mint in 2009.
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    Updated: 10 Aug 2020, 07:04 AM IST
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