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NPS Tier II A/c With 11% Return Beats FD, Liquid Funds


NPS is a retirement savings product which was initially launched for contribution by central government employees and then later was extended for all for their retirement planning. And under it there are two accounts, NPS Tier I which is a mandatory account that provides for taxation benefit and the other NPS Tier II is an optional account in which the contribution as well as the redemption can be made at subscriber's own will. Though withdrawal takes as many as 3 days times since the amount gets transferred from trustee's bank account to subscriber's bank account and the redemption amount depends on the applicable NAV at the time of redemption.

NPS Tier II A/c With 11% Return Beats FD, Liquid Funds

And now given the current low interest rate regime, where deposit rates have fallen by a steep quantum, with SBI being the most trusted banking offering just 4.9% return for deposits with a tenure of 1 year to less than 2 year, NPS II account G scheme fetched a relatively higher return than most fixed income products including even liquid debt funds for that matter.

NPS Tier II account with an asset base of Rs. 600 crore allows investments in equities, corporate bonds, government bonds and alternative investment.

Here is how NPS Tier II Scheme G has performed with investment in G-bonds and related securities:

Pension fund Return 1 year 3 years 5 years 10 years
Aditya Birla Sun Life Pension 11.08% 9.14% NA NA
HDFC pension 11.48% 9.67% 10.16% NA
ICICI Pru Pension 11.25% 9.44% 10.09% 9.9%
Kotak Mahindra Pension 10.86% 9% 9.99% 9.52%
LIC Pension 11.44% 11.32% 11.4% NA
SBI Pension 11.2% 9.44% 10.14% 9.91%
UTI Retirement Solutions 11.01% 9.23% 9.92% 9.65%

Source: NPS Trust

Read more about: nps nps tier ii
Story first published: Thursday, September 24, 2020, 9:38 [IST]
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