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How NPS Tier-1 Accounts Has Outperformed Corporate Debt Funds?

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Over the last three years, HDFC Pension Fund Scheme has been the top performer among National Pension System (NPS) funds in the corporate debt funds category. HDFC Pension Fund Scheme is a pension fund managed by HDFC. Over the last three years, it has delivered an annual return of 10.09 percent, outperformed other high-rated Debt Corporate Bonds. According to NPS trust, other pension fund managers' Schemes C (corporate debt) performed well as well, with high returns up to 10.09 percent over the same period. They outperformed their corporate bond mutual fund peers, which returned 8.68 percent on average.

 

HDFC Pension Fund Scheme was followed by SBI Pension Funds with a three-year return of 9.92 percent, and LIC Pension Fund, with a return of 9.86 percent, came in second and third, respectively. The least outstanding scheme in this category was Kotak Pension Fund, which has a three-year yield of 8.46 percent. Some pension funds has even outperformed corporate bond mutual funds with an average return of 8.45 percent in the five-year return category. Over a five-year period, HDFC Pension Fund's Scheme C has the highest annual return of 9.60 percent. ICICI Prudential Pension Fund and SBI Pension Fund came in second and third, respectively, with 9.44 percent and 9.44 percent returns. Even the worst-performing fund, Kotak Pension Fund, with an 8.64 percent return is failed to touch the benchmark's performance over the five years which is 9.69%.

NPS Scheme C Tier-1 Returns

NPS Scheme C Tier-1 Returns

Pension Fund3 Year Returns5 Year Returns
Aditya Birla Sun Life Pension Management Ltd. 9.57% NA
HDFC Pension Management Co. Ltd. 10.09% 9.60%
ICICI Pru. Pension Fund Mgmt Co. Ltd. 9.67% 9.44%
Kotak Mahindra Pension Fund Ltd. 8.46% 8.64%
LIC Pension Fund Ltd. 9.86% 9.20%
SBI Pension Funds Pvt. Ltd 9.92% 9.44%
UTI Retirement Solutions Ltd. 9.26% 8.97%
Benchmark Return as on 19/03/2021 10.60% 9.69%
Source: NPS Trust

Corporate Debt Fund Returns
 

Corporate Debt Fund Returns

Fund Name3 Year Returns5 Year Returns
ABSL Corporate Bond 9.11% 8.74%
HDFC Corporate Bond 9.06% 8.77%
ICICI Pru Corporate Bond 8.78% 8.55%
Kotak Corporate Bond 8.60% 8.44%
Axis Corporate Debt Dir 8.76% -
IDFC Corporate Bond Dir 8.51% 8.46%
Source: Value Research

Note

Note

One can open a NPS Tier-1 account with a minimum deposit of Rs 1000 per year and the account matures at 60 years old, although it can be extended to 70 years of age. NPS Tier 1 contributions up to Rs 1.5 lakh are eligible for a tax deduction under Section 80 C and an additional Rs 50,000 under Section 80 CCD (1B) of the Income Tax Act, 1961. The NPS Tier 1 account balance can be withdrawn tax-free up to 60% of the balance and the remaining 40% should be used to buy an annuity.

Read more about: nps
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