National Pension System (NPS) Consumer Preference Report 2023


NPS Preference Index Study 2023

In an age where financial security is paramount, our commitment to empowering individuals for a secure retirement gains unprecedented strength.

National Pension System (NPS) is a government-backed retirement savings program designed to provide financial security to Indian citizens during their retirement years. NPS can be subscribed to by any Indian citizen, aged between 18-70 years, on a voluntarily basis.

In India, a significant opportunity exists to boost NPS adoption, which is why there was a need to delve deeper into the intricacies and understand why.

HDFC Pension is proud to unveil a Consumer Insights Report that not only illuminates the landscape of retirement planning but is an industry first spotlight on the National Pension System (NPS) as a cornerstone of this journey. This research has been conducted in association with an independent market research specialist Ipsos.

Our pursuit is not limited to mere awareness; it extends to building an earnest understanding of NPS among individuals, which is why we worked further ahead to present the ‘NPS Preference Index’, a powerful metric derived from three broad aspects that delve into familiarity, appeal and consideration for NPS.”

The objective of the survey was to understand consumer outlook towards retirement and gauge consumer familiarity, appeal and consideration, leading to the ‘NPS Preference Index’ which can be tracked over time.

The survey findings indicate that currently the NPS Preference Index stands at 54 (on a scale of 0 to 100). Hence, it can be concluded that NPS Preference Index is currently at a moderate level and is equally influenced by the three pillars of familiarity, appeal and consideration.

NPS Preference Index improves with increasing income level of the consumers. North region has the highest NPS preference index (57) compared to other regions.

Some other highlights of the report:

  • Even though, on an average, 32 years is considered as an ideal age to start retirement planning, the retirement corpus need is often underestimated. Average ideal retirement corpus of Rs. ~1.3 Cr stated by consumers is observed to be less than 10X of their current annual household income reflecting the need to educate consumers about the recommended levels of retirement corpus
  • Capital security, tax benefi­ts, and continued income after death are key factors for retirement products. While being a relatively new instrument, NPS ownership is at 24%, with appealing features like tax-free withdrawals, safety (being Government regulated) and benefit for spouse. Tax benefit (80C/80CCD) has a relatively higher appeal (35%) among those enrolled for NPS compared to all consumers (31%)
  • While tax bene­fits, peers, and ­financial advisors trigger NPS purchase, educating people about NPS and its features is critical to drive adoption. It has further been noticed that individuals who have enrolled for NPS feel more confident about their financial health during retirement years. It can thus be said that NPS ownership is a strong indicator of financial preparedness for one’s retirement years.

To know more about the survey, click here.