India has made significant strides in expanding pension and insurance coverage, strengthening the country’s social security framework over the years, the Economic Survey 2025–26 has highlighted. The Survey, tabled in Parliament by Union Finance Minister Nirmala Sitharaman, underscores the role of sector regulators, PFRDA and IRDAI, in advancing reforms aimed at deepening financial inclusion and extending protection to underserved and informal segments.
Pension Sector: Broadening Coverage and Building Scale
The Survey notes that the Pension Fund Regulatory and Development Authority (PFRDA) has laid the foundation for a diversified and increasingly inclusive pension ecosystem. India’s pension landscape now reflects a multi-tier architecture, anchored by:
- The market-linked National Pension System (NPS)
- The government-backed Unified Pension Scheme (UPS) launched in 2025
- Complementary schemes such as Employees’ Provident Fund (EPF) and Atal Pension Yojana (APY)
Growth in Subscribers and Assets
As of 31 December 2025:
- NPS subscribers stood at 211.7 lakh
- Assets under management (AUM) amounted to ₹16.1 crore
Over the decade FY 2014-15 ~ FY 2024-25:
- NPS subscribers grew at a CAGR of 9.5 per cent
- NPS AUM expanded at a CAGR of 37.3 per cent
Since its inception in 2016:
- APY subscriptions recorded a CAGR of 43.7 per cent
- APY AUM grew at a CAGR of 64.5 per cent
Extending Pensions to the Informal and Gig Workforce
The Survey highlights PFRDA’s emphasis on widening the social security net, particularly for India’s large informal workforce.
- The NPS e-Shramik model, launched in October 2025, is designed to integrate platform and gig workers into formal retirement savings.
- PFRDA is also partnering with Farmer Producer Organisations (FPOs) and MSMEs to extend pension coverage to farmers, SHG members, and agricultural workers through NPS and APY.
Despite progress, the Survey acknowledges persistent awareness and access gaps, especially among low-income and rural households, which continue to have limited exposure to long-term retirement products. To address these gaps, recent measures include:
- Simplified onboarding and digital KYC
- e-NPS and NPS Lite variants
- Flexible contribution structures
- Targeted pension products for minors, gig workers, and farmer groups
- Focused APY outreach campaigns
Way Forward for India’s Pension Ecosystem
The Survey outlines that the next phase of pension reform should focus on:
- A calibrated expansion of contributory and non-contributory schemes
- Stronger engagement with State governments, cooperatives, farmer networks, and gig-platform companies for last-mile delivery
- Greater regulatory coherence between EPFO, PFRDA, and State-level pension bodies to reduce fragmentation, enhance portability, and streamline governance
Improved interoperability across NPS, APY, and allied schemes will be critical as workers migrate across sectors and geographies. The Survey also stresses the need to strengthen actuarial capabilities, risk-modelling frameworks, and long-duration investment channels to improve resilience and long-term returns.
Insurance Sector: Structural Shifts and Reform Momentum
The Economic Survey notes that India’s insurance sector is undergoing a structural transformation, aligned with the vision of ‘Insurance for All by 2047’.
Regulatory Evolution
- IRDAI has transitioned towards a principle-based regulatory framework, consolidating regulations, reducing compliance burdens, and allowing greater flexibility for innovation.
- The Sabka Bima, Sabki Suraksha Act, 2025 signals a push toward digitisation and democratisation of insurance coverage.
- The increase in the FDI limit to 100 per cent, along with other amendments, is expected to improve ease of doing business and accelerate sector expansion.
Structural Shift in Non-Life Insurance
A key development highlighted by the Survey is the transformation of the non-life insurance segment:
- Health insurance now accounts for 41 per cent of gross domestic premium, overtaking motor insurance as the largest line of business.
- Net incurred claims in the non-life segment rose by over 70 per cent since FY 2020-21, reaching ₹1.9 lakh crore in FY 2024-25, largely driven by health and motor insurance.
Meanwhile:
- The life insurance segment continues to dominate, accounting for 91 per cent of total AUM and around 75 per cent of premium income.
- Life insurers paid benefits of ₹6.3 lakh crore in FY 2024-25.
Distribution Reach and Market Infrastructure
India’s insurance ecosystem currently comprises:
- 26 life insurers
- 26 non-life insurers
- 7 health insurers
- 2 specialised insurers
As of March 2025:
- The number of insurers’ offices stood at 22,076
- The distribution network expanded from about 48 lakh in FY 2020-21 to nearly 83 lakh distributors in FY 2024-25, including agents, point-of-sale persons, and institutional partners
GST Relief and Persistent Challenges
The Survey notes that GST exemptions on life insurance and individual health insurance policies have provided meaningful relief to policyholders and improved affordability.
However, the sector continues to operate in a ‘low-penetration, high-cost’ equilibrium, driven primarily by:
- High-cost distribution models
- Elevated customer acquisition expenses
The Way Ahead
To address these constraints, the Survey prescribes a decisive shift toward:
- Digitisation of distribution channels
- Rationalisation of acquisition costs
- Restoring value for money for policyholders
Conclusion
The Economic Survey 2025-26 concludes that India’s pension and insurance sectors have made measurable progress in expanding coverage and strengthening social security, supported by regulatory reform, digital adoption, and targeted inclusion strategies. Going forward, sustained gains will depend on interoperability, cost efficiency, and last-mile outreach, positioning social security as a core pillar of India’s long-term economic resilience. (Source: PIB PR ID 2219928)
Economic Survey of India 2025-26 dated 29/01/2026