India Pension Industry - UPS Muddies Annuity Opportunity But Only In The Distant Future: Yes Securities

Yes Securities Report

We try to make sense of the introduction of the Unified Pension Scheme for the life insurance industry, which has been a key beneficiary of the mandatory annuitisation rule under NPS. We note that-

1. The UPS seems superior to the NPS from a subscriber standpoint and, whether mandatory or not, seems set to materially replace the NPS,

2. Prima facie, there does not seem to be mandatory annuitization under the UPS and, if so, it is negative for life insurers,

3. The conclusion can be potentially more negative if the states follow the Centre in implementing the UPS,

4. All of the above being said, the NPS is not quite a dramatic here-and-now opportunity and the impact, if any, is in the distant future.

We most prefer Max Financial Services Ltd. and SBI Life Insurance Company Ltd. in the life insurance space.

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