HDFC Pension’s ₹1.07 lakh crore milestone: Sriram Iyer on making India retirement-ready

As of February 2025, we are the largest pension fund manager in the Corporate and Retail segment, with an AUM exceeding ₹1.07 lakh crore and a market share of 43.3%.” With this statement, Sriram Iyer, CEO of HDFC Pension, sets the stage for a simple yet important conversation about retirement planning in India. 

As more people start thinking about their financial future, HDFC Pension’s growth shows how the right mix of smart planning, use of technology, and focus on customers can make a big difference. In this interview with Fortune India, Iyer talks about how the NPS is evolving, what the new Unified Pension System means, and why helping India become retirement-ready is both a challenge and an opportunity.

Edited Excerpt

Q. What are the key factors that, in your opinion, have hindered the broader adoption of the NPS in India?

A. There is limited awareness and understanding. Many individuals still lack a full understanding of the benefits and features of NPS. There is little awareness about the flexibility in investment choices, its low expense ratio, and the tax benefits that NPS offers.

Most people don’t fully understand the array of benefits that NPS offers. In fact, Corporate NPS, where you can invest up to 14% of the Basic salary, is one of the only tax benefit investment vehicles available under the new tax regime. However, NPS is still perceived as a Rs 50k ‘Tax Saving’ product by many.

Also, there needs to be greater effort undertaken, to educate both the public and corporates about NPS. The task of outreach and adoption has fallen largely on the Pension Fund Managers and PFRDA. Despite it being one of the most effective products for building a meaningful retirement corpus, this product generated limited interest amongst Financial Distributors/Intermediaries (Banks, MF Distributors, Insurance agents) on account of competing financial products offering higher commercials for the distribution fraternity.

Q. With the Unified Pension System (UPS) launching on 1 April, how do you foresee this impacting the NPS landscape and HDFC Pension's strategy?

A. The UPS is being introduced as an alternative to NPS for Central Government employees, offering a guaranteed 50% pension of the last drawn basic salary and ongoing inflation indexation through Dearness relief.

While we will need time to assess the level of adoption, it is anticipated that Central Government employees will likely choose this option. However, the Corporate NPS and Retail NPS segments, which are the fastest-growing, will remain unaffected and continue to pick up pace given the increasing awareness levels about NPS.

HDFC Pension’s mission to educate Indians on the importance of retirement savings and how NPS can be used to build a meaningful corpus will continue unabated.

We will continue to work with Government departments to help employees understand options available under both options and continue to handhold them through this process.

Q. What are the most significant challenges and opportunities that HDFC Pension anticipates with the implementation of the UPS?

A. This presents us with an opportunity to heighten our engagement with Government offices/employees and work with them in this process of transition. Given that this has no impact on the non-government segment, we will continue to focus on building our business through the Corporate NPS and All citizens model – the Corporate NPS model has seen excellent traction through HDFC Pension’s Point of Presence unit.

The tech architecture needed to ensure smooth adoption of UPS will need to be worked upon by the CRAs. We understand that they are already at advanced stages and have been collaborating with stakeholders to ensure implementation of the changes that need to be implemented.

There are over 25 lakh Central Govt employees who are currently on NPS. In addition to this, new employees are also being recruited across different departments at a regular frequency. The entire NPS Ecosystem consisting of PFRDA, PFMs, CRAs and Nodal offices at Govt departments will need to work in close coordination to ensure that employees are made aware of the features and benefits of both options.

Q. How do you believe the PFRDA can further incentivise participation in the NPS, particularly among the self-employed and private sector employees? What is your opinion on the level of digital integration within the NPS, and how can this be improved to increase participation?

A. There are several strategies to enhance NPS participation among private sector employees and the self-employed, such as:

Making NPS a mandatory/opt-out scheme for salaried employees

Allowing employees to choose between EPF and NPS

Given that any retirement corpus creation is a long-term journey, introducing tax incentives for individuals under the new tax regime will provide further impetus to self-employed individuals to contribute to NPS

Relaxing/relooking at the ₹7.5 lakh cap (u/s 80ccd (2)) on employer contributions under Corporate NPS, as this limit discourages higher contributions, particularly among senior leadership

Digital Integration:

The level of digital integration on NPS is quite superior – any individual who has a CKYC can open a PRAN within a matter of a few minutes. The Aadhar-based KYC journey is also quite efficient. Ongoing service requirements (such as contribution, statement retrieval, scheme change etc) from a Subscribers perspective can be fulfilled by accessing the CRA website or Mobile applications.

In addition to the tech friendliness of the overall ecosystem, HDFC Pension PoP, as a leading distributor of NPS, has already implemented a WhatsApp Bot that helps its subscribers access their statements in a matter of a few seconds apart from allowing voluntary contributions. We are currently in the advanced stages of launching a technology-based platform that will provide greater convenience and efficiency to Corporate Nodal officers - an efficient on-boarding journey that will help individuals open an NPS account within minutes.

There is some work that needs to be done by leveraging technology to simplify and gamify calculators, etc., such that a user is made aware of the appropriate choices to make from an Investment scheme/Fund Manager choice perspective.

Q. What are the biggest misconceptions that people have about the NPS, and how can these be addressed? How can financial literacy be improved to increase the amount of people that are investing in retirement funds, such as the NPS?

NPS fund returns: There is insufficient knowledge amongst individuals about NPS performance – in fact, all three asset classes under NPS (Equity, Corporate Bonds and Government Securities) have delivered returns that can be compared quite favourably with the actively managed universes.

Tax Benefits: There is a misconception that NPS only offers a ₹50,000 tax benefit. However, NPS follows an "EEE" tax structure, providing additional tax benefits up to 14% of basic salary under 80CCD(2) for salaried employees, as well as zero tax on accrued gains and capital gains. With its low cost and tax advantages, NPS is an ideal vehicle for building a retirement corpus.

Flexibility: People are unaware of the various flexibilities NPS offers, such as contributions, multiple asset class choices, investment switches, corpus rebalancing, and portability.

Liquidity: We need to note that the locked-in nature of the product (with limited exit options) makes subscribers continue for the long term which is necessary while planning for retirement.

Compulsory annuitisation: People are reluctant about the idea of 40% of their corpus being allocated to an annuity. However, people don't always understand the importance of annuities in a retiree’s portfolio, as they help address longevity and reinvestment risks.

Addressing Misconceptions and Promoting Financial Literacy:

Education Campaigns and Seminars: All stakeholders in the NPS ecosystem must actively participate in raising awareness through both digital and offline platforms. HDFC Pension is committed to the mission of ‘Making India Retirement Ready’ by educating people about NPS.

Relevant Content: It is essential to create communications that resonate with different employee or citizen groups, ensuring they understand how NPS can help them achieve their specific retirement goals.

Q. What are the biggest risks that people face when planning for their retirement, and how can the NPS help to mitigate those risks?

Some of the risks include:

Inflation: The gradual decline in purchasing power over time

Longevity Risk: The possibility of outliving retirement savings

Insufficient Savings: Not having enough funds to maintain a desired standard of living after retirement

NPS Mitigation:

Long-Term Investment: NPS offers the benefit of compound growth, helping to counter inflation and accumulate a substantial retirement corpus over time.

Asset Allocation Options: It provides the flexibility to choose from various asset classes (equity, corporate bonds, government securities) to align with individual risk preferences. The fund options available under NPS are also very well suited for individuals with varying risk appetite and financial literacy levels.

Post-Retirement Annuities: NPS ensures financial security post-retirement through annuities, offering regular income without reinvestment or longevity risks.

Flexibility: Subscribers can use NPS as the primary vehicle to build a meaningful retirement corpus and take advantage of the flexibilities that it offers in the form of Asset allocation, Fund and Fund Manager option, Systematic Lumpsum Withdrawal, continuing with the fund right till the age of 75 and enjoying market linked returns.

Q. How has HDFC Pension's growth trajectory compared to its peer group in the pension fund management sector?

A. HDFC Pension has significantly outperformed many of its competitors in the pension fund management sector. As of February 2025, we are the largest pension fund manager in the Corporate and Retail segment, with an AUM exceeding ₹1.07 lakh crore and a market share of 43.3% of AUM under Retail and Corporate segment. Additionally, we are also the largest POP in terms of corporate subscribers and corporate relationships.

Our commitment has always been to deliver long-term value for the subscribers who trust us with their retirement savings. HDFC Pension has consistently achieved top-quartile returns, reinforcing our dedication to excellence.

Q. What are the key differentiators that contribute to HDFC Pension's success and market position? What are HDFC Pension's plans for increasing its market share over the next few years?

A. Strong brand reputation: The "HDFC Brand" has earned tremendous trust and recognition in the market.

Customer-centric approach: We prioritize customer needs, offering tailored communication and solutions for different segments.

Investment management expertise: Our investment strategies are built on a foundation of safety and stability, delivering consistent long-term value.

Digital innovation: We are focused on enhancing digital capabilities to provide an exceptional customer experience.

Plans for increasing market share:

Expand digital offerings: We aim to enhance our digital tools to better serve the growing tech-savvy customer base and deliver an outstanding experience. Technology will also play a pivotal role in helping us service our Corporate and retail subscriber base more efficiently and minimise friction in ongoing servicing.

Strengthen corporate and Subscriber base: We plan to grow our network of corporate partnerships and increase subscriber penetration to extend our reach – this will be done by strengthening the team and providing technology-enabled solutions to our team and corporate partners to enhance efficiency and productivity.

Increase awareness: Our marketing and outreach efforts will be ramped up to educate and engage more individuals on the importance of retirement planning. We will continue to work on an innovative jargon-free approach to communicating the importance of retirement planning to our target segment.