Nobody wants NPS? India’s 'cheapest' retirement plan is failing, advisor explains why
The 2020s saw a shift in tax regimes, and with over 70% of taxpayers moving to the new system—one that eliminates 80C and 80CCD(1B) deductions—the once-popular tax benefit linked to NPS vanished. That, Kumar said, “killed a huge incentive.”
- Aug 28, 2025,
- Updated Aug 28, 2025 2:45 PM IST
Despite being one of India’s cheapest retirement products, the National Pension System (NPS) is struggling to find takers so much so that regulators are now scrambling to revive it with a new pension agent model after the retirement adviser system fell flat.
SEBI-registered investment advisor Abhishek Kumar called it “a retirement product nobody wants to buy.”
Writing on LinkedIn, Kumar pointed to falling sign-ups—from 8.7 lakh new accounts in FY22 to just 8 lakh in FY24—and laid out why the product continues to flop despite its low cost and long-term benefits.
His blunt diagnosis? “No tax perks, no commissions, no excitement.”
The 2020s saw a shift in tax regimes, and with over 70% of taxpayers moving to the new system—one that eliminates 80C and 80CCD(1B) deductions—the once-popular tax benefit linked to NPS vanished. That, Kumar said, “killed a huge incentive.”
The numbers tell the same story. According to PFRDA data, the number of new NPS accounts opened under the ‘All Citizens’ model has steadily declined over the last three years. At just 803,000 new accounts in FY24, uptake is slowing even as India’s salaried class grows.
Then there’s the issue of distribution. Insurance agents and mutual fund distributors earn far more through commissions—up to 0.8% of assets under management for equity mutual funds. For NPS distributors, the compensation is minimal. “NPS? Pennies,” Kumar wrote.
Only 63 registered retirement advisers exist across India, according to PFRDA data, a stark contrast to the scale needed. The Pension Fund Regulatory and Development Authority (PFRDA) has since introduced a new class of “pension agents” tied to Points of Presence (PoPs), but insiders remain skeptical, calling the structure both unappealing and unclear.
For younger investors, the product also carries a stigma—money is locked in for decades, and the ecosystem is cluttered with CRAs, PoPs, and agents, with no single authority inspiring trust.
“Unless PFRDA fixes incentives,” Kumar warned, “NPS will remain the stepchild of Indian investing.”
Despite being one of India’s cheapest retirement products, the National Pension System (NPS) is struggling to find takers so much so that regulators are now scrambling to revive it with a new pension agent model after the retirement adviser system fell flat.
SEBI-registered investment advisor Abhishek Kumar called it “a retirement product nobody wants to buy.”
Writing on LinkedIn, Kumar pointed to falling sign-ups—from 8.7 lakh new accounts in FY22 to just 8 lakh in FY24—and laid out why the product continues to flop despite its low cost and long-term benefits.
His blunt diagnosis? “No tax perks, no commissions, no excitement.”
The 2020s saw a shift in tax regimes, and with over 70% of taxpayers moving to the new system—one that eliminates 80C and 80CCD(1B) deductions—the once-popular tax benefit linked to NPS vanished. That, Kumar said, “killed a huge incentive.”
The numbers tell the same story. According to PFRDA data, the number of new NPS accounts opened under the ‘All Citizens’ model has steadily declined over the last three years. At just 803,000 new accounts in FY24, uptake is slowing even as India’s salaried class grows.
Then there’s the issue of distribution. Insurance agents and mutual fund distributors earn far more through commissions—up to 0.8% of assets under management for equity mutual funds. For NPS distributors, the compensation is minimal. “NPS? Pennies,” Kumar wrote.
Only 63 registered retirement advisers exist across India, according to PFRDA data, a stark contrast to the scale needed. The Pension Fund Regulatory and Development Authority (PFRDA) has since introduced a new class of “pension agents” tied to Points of Presence (PoPs), but insiders remain skeptical, calling the structure both unappealing and unclear.
For younger investors, the product also carries a stigma—money is locked in for decades, and the ecosystem is cluttered with CRAs, PoPs, and agents, with no single authority inspiring trust.
“Unless PFRDA fixes incentives,” Kumar warned, “NPS will remain the stepchild of Indian investing.”