pension The Fund Regulatory and Development Authority (PFRDA) has increased the number of existing investment options under the National Pension System (NPS) and Unified Pension Scheme (UPS). PFRDA has introduced two new auto choice options in investment options, taking the total number of investment options to 6 for Central Government (CG) subscribers. The new Auto Choice investment options include ‘Auto Choice -Life Cycle 75-High (15E/55Y)’ and ‘Auto Choice -Life Cycle- Aggressive (35E/55Y)’. Government employees will directly benefit from this step of PFRDA and now they will get the facility to choose new investment options under the pension scheme.
Currently there are 4 investment options available for NPS and UPS Central Government subscribers-
Default Scheme: Contributions are invested as per a pre-determined asset allocation pattern managed by 3 pension funds.
Active Choice (100% G-Sec): Investment only in Government Securities.
Auto Choice- Life Cycle 25 – Low (5E/55Y): 25% of the subscriber’s contribution is invested in equities till they turn 35 and the equity allocation later reduces to 5% at the age of 55, which continues till exit.
Auto Choice- Life Cycle 50 – Moderate (10E/55Y): 50% of the subscriber’s contribution is invested in equities till they turn 35 and the equity allocation subsequently reduces to 10% at the age of 55, which continues till exit.
What will happen in the new investment option
Auto Choice- Life Cycle 75 (High): Till the age of 35, 75% of the contribution will be invested in equities, which gradually reduces to 15% by the age of 55. This option is designed for subscribers who are comfortable with higher market-linked volatility, in return for potentially higher long-term returns.
Auto Choice- Life Cycle- Aggressive: Till the age of 45 years, 50% of the contribution will be invested in equities, which reduces to 35% by the age of 55 years. The higher equity floor makes it different from existing options and is designed for subscribers who want a growth-oriented portfolio even in their mid-career.
The regulator has advised subscribers to look at the scheme’s performance and pension fund track record before making changes to the scheme. Updated data of scheme and fund wise returns is available on the NPS Trust website.
Disclaimer: This article has been written for information purposes only. Always consult your financial advisor before making any kind of investment or taking any financial risk. India TV will not be liable for any kind of risk.
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