Are you planning your retirement correctly? Tax free, govt security—research explains key reasons why Indians prefer NPS

HDFC Pension Fund Management’s ‘NPS Preference Index Study 2026’ found that preference for the National Pension Scheme (NPS) among Indians has risen to 57, up three points from the inaugural 2023 reading of 54.

The research highlighted key behavioural insights amongst Indians towards retirement planning and their preference towards the NPS as an instrument for retirement planning, an official release said. The readings are made on a scale of 0 to 100 by the research team.

Why do Indians prefer NPS for retirement planning?

As per the study, India’s NPS Preference Index rose to 57 this year, with the gain led by “Consideration”, which climbed six points to 59, ahead of “Familiarity,” (58, up three points) and “Appeal” (56, up two points). This indicated that Indian savers are moving from passive awareness of NPS to active evaluation of the product, it added.

Sriram Iyer, MD and CEO of the pension fund said, “India’s retirement story is building steadily”, adding that it will empower Indians and help them build a strong corpus for their retirement needs. “Seeing a rise in preference index is an indication that we are moving in the right direction, however, there is more ground to cover… While we see improvement in Consideration for NPS, it is essential to convert this into enrolment,” he added.

• Retirement planning held its place among consumers’ top financial priorities, behind medical expenses (45%), emergency corpus building (39%), and child’s education (35%).
• Rising healthcare costs (47%) and age-related health issues (44%) were cited as the leading retirement concerns.
• 69% of respondents claimed they expected some financial support from family or children after retirement.

Leading triggers for NPS enrolment: An insight

As per the research report, the recent enhancements to NPS emerged as key reasons for enrolment in the scheme at 39%, ahead of tax savings (38%) and better returns (36%).

• Tax free withdrawal after age 60 years (59%) and the product’s status as a safe, government regulated instrument (52%) remained its strongest appeal.
• Despite recent product changes, lock-in period (26%) and mandatory annuity purchase (25%) continued to be cited as leading barriers to adoption, while lack of knowledge, the top barrier in the 2023 edition, fell to fifth place.
• The shift suggests that knowledge gaps are easing, even as product-related concerns persist.
• The 2026 edition also tracked awareness of NPS Vatsalya, the scheme for minors introduced since the previous wave, finding 28% awareness among parents, of whom 27% reported a full understanding of its features.
• Tax-saving benefits (44%) and the discipline of long-term saving (41%) were the leading reasons parents cited for enrolling their children.

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