Empowering Women Through NPS: A New Era Of Financial Independence

By Mamta Shankar

For decades, people have imagined retirement as a phase where they enjoy their golden years, supported by a steady income from pension. However, for many women, financial security in retirement remains challenging. Despite contributing significantly to both their profession and domestic responsibilities, women often face economic disadvantages that impact their long-term financial stability.

According to the recent Economic Survey, “the female labour force participation rate (FLFPR) has been rising for seven years, from 23.3 per cent in 2017-18 to 41.7 per cent in 2023-24, driven mainly by the rising participation of rural women”. However, despite these significant contributions, financial security in retirement remains challenging, thus impacting their long-term financial stability.

According to the Sample Registration System (SRS) (2016-2020), “the expectation of life at age 60 is 18.3 years for 2016-20, with 17.5 years for males and 19.2 years for females,” indicating that women tend to live longer and require greater financial preparedness.

Data from the World Bank also suggests that women’s pensions are 25–30 per cent lower than that of men, highlighting a stark disparity in retirement preparedness.

In India, this gap is even more pronounced due to relatively lower workforce participation, wage disparities, and career interruptions due to caregiving responsibilities.

Financial literacy further compounds this challenge. A 2023 report by the National Centre for Financial Education (NCFE) indicates that only 27 per cent of India’s population possesses adequate financial knowledge, with the figure dropping to 21 per cent for women. This lack of awareness restricts women from making informed financial decisions, leaving them more vulnerable in old age.

A Shift Towards Financial Empowerment

The paradigm shift occurring in savings and investments patterns indicate that more women in India are taking charge of their financial futures through structured retirement planning.

The National Pension System (NPS) and Atal Pension Yojana (APY) have emerged as crucial tools in this transformation, particularly in the private and organised sectors.

Under NPS, women’s participation has also seen a notable rise. In the 18–29 years age group, female subscribers in the private sector have increased from 237,742 in January 2024 to 308,226 in January 2025, reflecting an impressive 29.65 per cent growth. While challenges remain, this steady rise signals a positive shift in mindset and behavioural aspects, with more women actively preparing for a financially secure retirement.

APY has also played a crucial role in expanding pension coverage for women, especially in the unorganised sector. As of February 28, 2025, women make up nearly 48 per cent of total APY subscribers, reflecting the scheme’s significant contribution towards financial inclusion.

The APY data highlights that women are more disciplined in terms of making regular contributions to their APY accounts. Our interactions with bankers also suggest that enrolling the women of a household in APY acts a nudge for the other eligible members of the household to opt for the scheme, too.

Notably, in FY 2023-2024, women’s enrolment in APY reached 52 per cent, surpassing that of men. This upward trend has continued in FY 2024-25, with women’s enrolment rising to 54 per cent as of February 28, 2025. This marks a positive shift in retirement planning trends among women.

APY provides a guaranteed minimum pension of Rs 1,000-5,000 per month, making it a reliable retirement solution for women in low-income jobs without formal pension benefits, and self-employment. Its flexible contribution options make it particularly attractive by addressing the seasonality in income of the subscribers and ensuring adequate corpus accumulation for financial stability in later years.

A significant shift is taking place within NPS too, particularly through NPS Vatsalya, a retirement-focused investment plan for minors, which was launched in September 2024. This unique initiative allows parents to open an NPS account for their children aged up to 17 years, fostering early financial literacy and instilling the habit of long-term savings.

Among NPS Vatsalya subscribers, 44 per cent are girls, further signalling a progressive move toward financially securing future generations of women. By encouraging early investment in retirement planning, this scheme is setting the foundation for greater financial independence among women as they transition into adulthood.

The Road Ahead: Financial Inclusion and Awareness

Several factors have contributed to the increasing number of women subscribing to pension schemes, such as NPS and APY. Greater financial awareness has played a key role, as more women gain the knowledge needed to make informed investment decisions.

Additionally, many private sector companies are launching financial wellness programs, including workshops, advisory sessions, and targeted awareness campaigns to encourage female employees to engage in retirement planning.

A cultural shift is also taking place, with women increasingly realising that financial independence in retirement is not just an aspiration, but a necessity. This understanding that pension schemes provide long-term security has led to a transformation in mindset, where more women are proactively investing in their future.

Just as women gift themselves jewellery on occasions, such as Akshaya Tritiya, Diwali, Christmas or Eid as a symbol of prosperity, NPS can be considered a meaningful gift to oneself – an investment that ensures financial security and independence in the golden years.

Further, women's career paths tend to be more challenging compared to men’s, as they often have to take career breaks or switch jobs or locations due to family commitments, childcare, or caregiving responsibilities. These career interruptions directly impact their long-term savings, employment status, pension contributions, and overall retirement preparedness. However, NPS, with its flexible contributions, portability, and employment-neutral structure, has made retirement planning more accessible. This enables women to continue building their financial security seamlessly, even as they navigate career transitions.

The combined efforts of the government, Pension Fund Regulatory and Regulatory Development Authority (PFDA), private sector, and the distribution channel, essentially the points of presence (PoPs), namely the banks, brokers and pension funds, will continue to play a crucial role in ensuring that every woman has the opportunity to build a strong financial foundation for her retirement years. With continuous financial education, supportive policies, and evolving pension solutions, the future of women’s financial security looks more promising than ever.

The steady rise in women’s participation in NPS, NPS Vatsalya, and APY is more than just a statistical achievement – it reflects a larger movement toward financial empowerment and inclusion. This journey toward economic autonomy and retirement security is just a beginning. By embracing pension schemes like NPS, NPS Vatsalya, and APY, women are not just saving for retirement, they are investing in a future of self-reliance, dignity, and financial stability for themselves and the nation.

As we celebrate International Women’s Day, let us recommit ourselves to empowering women through financial literacy and retirement planning.

The author is a Whole-Time Member (Economics), PFRDA