Retirement Planning In Tier II, III Cities: Participation Rises Among Low-Income Earners

Retirement planning awareness has been increasing in India, not only among affluent Indians but also among those with lower disposable income. The demand for retirement products, which has historically been dominated by the metro cities, is gaining momentum in Tier II and Tier III cities.

According to the findings of Pensionbazaar, a digital retirement planning and pension platform, the purchase trends between April 2026 and September 2026 reveal a behavioural shift among people. People don’t just desire to plan for retirement, but they are taking action as well. The rising demand for retirement products shows this change, especially from smaller towns and lower-income groups.  

As per the data, smaller cities and towns (Tier II and III) constitute around 60 per cent of all retirement product purchases. Among these smaller geographies, Tier II citizens contributed 35 per cent, whereas Tier III cities contributed 25 per cent of the total demand. The remaining 40 per cent of demand came from Tier I and metro cities.

The data highlights digital access as one of the primary reasons for this shift in the demand for long-term products. The digital distribution platforms enable people to access information, compare options, and invest easily online instead of visiting the physical branch networks to execute their investment transactions.  

The ease of access and awareness around long-term investing is noticeable from the demand and conversations around post-retirement security in the smaller markets across the country.

Another finding from the data reveals that retirement planning is no longer an affluent class’s prerogative, which has enough surplus to save for a financially secure future. It underlines that people earning less than Rs 5 lakh annually now account for 35 per cent of the total buyers, which equals those earning more than Rs 10 lakh (35 per cent). The remaining 30 per cent of the total demand is from those earning between Rs 5 lakh and Rs 10 lakh.

This indicates a shift in mindset, from investing surplus income for retirement to a habit of financial discipline and investing regularly even if it’s a small amount. The data highlights that consumers don’t want to wait until they reach a higher salary bracket but take action while earning a smaller amount to save for post-retirement years.

Easy access to the schemes through digital modes and the option to invest through recurring monthly mode are the two key enablers for this behavioural shift.

Vishwajeet Goel, Head, Pensionbazaar, says, “Retirement planning is increasingly moving from a distant, end-of-career consideration to a financial habit that consumers are building during their prime earning years. The sharp increase in purchases also shows that this awareness is increasingly translating into action.”

In September 2026, 80 per cent of buyers opted for monthly payment modes, which is double the 40 per cent in January 2026. People who chose annual payment and lump sum payment stood at 10 per cent each. This reflects that the smaller income group is disciplining their investments and opting for recurring deposit mode to save and build a corpus.

The data highlights that younger people, between 26 and 50 years, account for the highest number (75.5 per cent) of purchasers buying long-term products through the digital platform, while 16 per cent are 25 years or below. The self-employed buyers account for 30 per cent of the transactions, which shows rising retirement planning awareness among people engaged in the informal sector.