NPS drives pension expansion, but coverage remains limited amid informality: Economic Survey 2025-26

India’s pension system has expanded steadily over the past decade, but overall coverage remains limited when measured against the size of the country’s vast workforce, the Economic Survey 2025-26 has said. While participation in formal retirement savings schemes is rising, the Survey flags high informality, irregular incomes and low awareness as the biggest structural constraints preventing broad-based pension inclusion, especially among low-income and rural households.

According to the Survey, the dominance of informal employment continues to shape the contours of India’s pension challenge. A large share of workers operate outside stable, salaried arrangements, making it difficult for them to commit to long-term, locked-in pension products, even when contribution amounts are modest. Volatile cash flows and competing short-term financial needs often take precedence over retirement planning, limiting the reach of contributory pension schemes.

NPS, UPS, EPF

Despite these constraints, the Survey points to a progressively evolving, multi-tier pension architecture that seeks to cater to diverse segments of the workforce. India’s pension landscape is anchored by the market-linked National Pension System (NPS) and the government-backed Unified Pension Scheme (UPS), launched in 2025. These are complemented by the Employees’ Provident Fund (EPF) for organised sector workers and the Atal Pension Yojana (APY), which targets low-income and informal workers with assured pension benefits.

The growth trajectory of the NPS stands out as a key indicator of increasing formalisation of retirement savings. As of December 31, 2025, the NPS had 211.7 lakh subscribers, with assets under management of about ₹16.1 lakh crore. Over the decade from FY15 to FY25, the number of subscribers grew at a compound annual growth rate (CAGR) of 9.5%, while assets under management expanded at a much faster CAGR of 37.3%. The Survey attributes this sharp rise in assets to higher participation, longer contribution horizons and growing acceptance of market-linked retirement products.

NPS e-Shramik

At the same time, policymakers are increasingly focusing on segments that have traditionally remained outside the pension net. The Survey highlights targeted initiatives such as the NPS e-Shramik model for platform and gig workers, which aims to integrate retirement savings into digital work interfaces. Partnerships with farmer-producer organisations, MSMEs and self-help groups are also being leveraged to extend pension coverage to agricultural workers and those in the unorganised sector.

Atal Pension Yojana

Outreach under the Atal Pension Yojana continues to play a critical role in bringing first-time savers into the pension ecosystem, particularly among low-income households. The Survey notes that simplified onboarding processes, digital KYC, and the use of payment platforms have improved accessibility, although further innovation in flexible contribution structures remains essential.

Looking ahead, the Economic Survey underscores that expanding pension coverage is not just about enrolment, but also about adequacy and sustainability. As India’s population ages and life expectancy rises, ensuring that pension savings translate into meaningful post-retirement income will become increasingly important. Addressing informality, improving awareness, and aligning pension products with the realities of irregular incomes are identified as key priorities for the next phase of reform.