Archive · 11 Nov 2025
Domestic Pension Funds Pour Record Sums into Equities
Imagine a piggy bank for people saving for retirement, called a pension fund.
Recently, a lot more of this retirement money is being put into the stock market, which is like a big marketplace for company shares.
This is the most money from these pension funds going into stocks that we've seen in many years.
One reason is that rules for a retirement plan called the National Pension System (NPS) changed, allowing more money to be invested in stocks.
Also, more young people are joining these plans and are comfortable putting more of their savings into stocks.
Another big retirement fund, the EPFO, has also been investing steadily in stocks through special funds that follow market indexes.
Experts believe this trend will continue as more people save for retirement and are open to investing in stocks, which means pension funds will have an even bigger impact on the stock market in the future.
Domestic pension funds, particularly the NPS, are showing record inflows into equity markets.
Inflows into the NPS reached Rs 37,409 crore in the three months ending September 2025, the highest recorded since 2016.
Changes in NPS guidelines, increasing the equity ceiling from 15% to 25% for many schemes, are a key driver.
A younger demographic entering the NPS is also contributing to higher equity allocations.
The EPFO has also been a consistent investor in equity markets through ETFs, with substantial holdings.
- Who
- Domestic pension funds, including the National Pension System (NPS) and Employees' Provident Fund Organisation (EPFO)
- What
- Record high inflows into equity markets, driven by increased allocations from pension funds.
- When
- For the three months ending September 2025 (record inflows), and for the first six months of FY26.
- Where
- Primarily observed in National Stock Exchange (NSE) data, indicative of broader market trends.
- Why
- Increased equity allocation limits for NPS schemes, rebalancing of portfolios, and a younger demographic willing to invest more in equities.
New Pension System (NPS) Perspective
Employees' Provident Fund Organisation (EPFO) Perspective
Equity Allocation Ceiling
New Pension System (NPS) Perspective
Guidelines effective April 2025 increased equity ceiling from 15% to 25% for many NPS schemes, applying to the entire corpus.
Employees' Provident Fund Organisation (EPFO) Perspective
EPFO began investing in equities in 2015, initially allocating 5% of incremental flows to ETFs, increasing to 10% in 2016 and 15% in 2017.
Investment Mechanism
New Pension System (NPS) Perspective
NPS rebalancing due to increased equity ceiling is likely causing a spike in allocations. Future monthly flows will determine activity levels post-rebalancing.
Employees' Provident Fund Organisation (EPFO) Perspective
EPFO invests via Exchange Traded Funds (ETFs) that passively track benchmark indices.
Market Influence and Growth
New Pension System (NPS) Perspective
Younger demographics joining NPS are willing to make higher equity allocations, suggesting increased stock market activity and growth over the next 10-15 years. However, mass adoption is still limited.
Employees' Provident Fund Organisation (EPFO) Perspective
EPFO's total investment in ETFs was Rs 1.97 trillion in FY23, rising to Rs 2.35 trillion in FY24, indicating substantial annual investments.
- Record Inflows (3 months ending Sep 2025)
- Rs 37,409 crore (NPS)
- Net Buying (6 months FY26)
- Rs 68,678 crore (NPS)
- Net Buying (6 months FY25)
- Rs 7,447 crore (NPS)
- NPS Equity Ceiling Change
- Increased from 15% to 25% (effective April 2025)
- EPFO ETF Investment (FY24)
- Rs 2.35 trillion
- EPFO ETF Investment (FY23)
- Rs 1.97 trillion