Corporate NPS subscriber addition grew 31% in FY23, shows NSO data

Central, state govt segments added fewer new subscribers than a year earlier

The adoption of the National Pension System (NPS) by corporate employees accelerated for a second straight year in 2022-23, with 193,283 new subscriptions — 30.6 per cent more than the 147,981 in FY22. Subscriber additions under central and state government components, meanwhile, declined during the same period, showed data released by the National Statistical Office (NSO) on Thursday.

The number of NPS subscribers added under the central government component declined 7.6 per cent to 124,920, and under state 6.2 per cent to 457,122. Experts see subscription figures at the central and state levels as a proxy for employment generation by the public sector.

However, though the Centre still mandates NPS for all its new employees, subscriber additions can no longer be used as an exact measure for hiring at the state level, as some states like Rajasthan, Chhattisgarh, Himachal Pradesh, Jharkhand and Punjab announced a return to the Old Pension Scheme (OPS) last year.

The decline in subscriber addition at the state level, in fact, can be partially explained by these states reverting to OPS, says Mukesh Anand, assistant professor at the National Institute of Public Finance and Policy (NIPFP). “But that doesn't explain the full picture. In reality, employment in the public sector has been declining for the past few decades, with contractualisation taking place at a large scale, especially in the central government. These workers are without social security, including pension. Despite the much publicised [rozgar] melas last year, employment at the centre grew only marginally,” he adds.

Of the new corporate subscribers added in 2022-23, the share of youth (18-28 age group) declined to 30.5 per cent from 34.9 per cent in FY22. This is crucial because subscribers in this age group are usually first-timers in the labour market.

The growth in the corporate component was driven by subscribers in the ‘more than 35’ age group. Their share increased to 36.5 per cent from 29.3 per cent last year, mainly as a result of the government scheme that provides existing corporate employees the option to shift their accounts from the Employees Provident Fund (EPF) to NPS.

“Government is actively encouraging employees to switch from defined-benefit schemes like EPF to defined-contribution schemes like NPS. Earlier, a one-time tax exemption was provided for such a switch. The idea was to provide more options to employers. This explains the rise in the share of older people in the corporate sector joining NPS,” Anand adds.