Investment corpus of pensions sector to reach above $1 trillion by 2025: Report

As per the report jointly prepared by the Confederation of Indian Industry (CII) and global professional services firm Ernst & Young (EY), after the passage of the Pension Fund Regulatory and Development Authority (PFRDA) Act 2013, investment corpus in the Indian pensions sector is likely to cross $1 trillion by 2025 as the sector moves forward to realize its full growth potential.

As per CII-CY report:

  • Pensions business offers a promising opportunity because of India’s changing demographics, an insufficient government-funded pensions system and the presence of a vivacious insurance and funds management sector.
  • By 2030, 180 million Indians or 12% of the population will be in the age bracket of 60-plus.
  • Pensions systems play a major role for the infrastructure sector, providing stability in capital markets.
  • The government has set a funding target of $1 trillion for the infrastructure sector for the 12th Plan (2012-16) period, while it expects the private sector to contribute 45% of the targeted investment.
  • Private pension funds are likely to provide 24% of the total corpus by 2025, while pensions and annuity products offered by life insurance companies are expected to contribute around 16%.

Current Status:

At present, the retirement funds corpus is in range of Rs.12-15 trillion, of which the Employees Provident Fund (EPF) holds one-third of the total, while the Public Provident Fund (PPF) and NPS account for about 2.5% each.

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