What Are The Investment Options Under NPS?
While subscribing to the CRA system under NPS, an NPS subscriber must select a Pension Fund Manager (PFM) as well as a scheme type. The subscribers have a number of alternatives from which to pick. Multiple PFMs, investment choices (Auto or Active), and four asset classes (Equity, Corporate Bond, Government Bond, and Alternative Infrastructure Funds) are available in NPS. A subscriber is first required to select a PFM and then choose from one of the following scheme options.
Pension Fund Managers Under NPS
The subscriber must first select one PFM from the below list:
- Birla Sun Life Pension Management Limited
- HDFC Pension Management Company Limited
- ICICI Prudential Pension Funds Management Company Limited
- Kotak Mahindra Pension Fund Limited
- LIC Pension Fund Limited
- SBI Pension Funds Private Limited
- UTI Retirement Solutions Limited
NPS Investment Options
The National Pension System (NPS) gives investors two options i.e. Auto Choice and Active Choice for investing in four asset classes: equities, government securities, corporate debt, and alternative investment funds (AIFs).
Active Choice Option In NPS
Based on your risk behaviour and personal preferences, you can allocate the funds according to your choice. The PFM, Asset Class, and per cent of allocation in each scheme of the PFM can be specified by the subscriber according to his or her choice. Under this option, there are four asset classes: equity, corporate debt, government bonds, and alternative investment funds, from which the allocation must be stated under a single PFM.
- Asset class E - Equity and related instruments
- Asset class C - Corporate debt and related instruments
- Asset class G - Government Bonds and related instruments
- Asset Class A - Alternative Investment Funds including instruments like CMBS, MBS, REITS, AIFs, Invlts etc.
NPS subscribers can choose multiple Asset Class under a single PFM using the active choice option, as shown below:
- Up to the age of 50, you can invest up to 75 per cent of your overall asset allocation in equity.
- For Alternative Investment Funds, the percentage contribution value should not exceed 5%.
- The overall allocation throughout E, C, G, and A asset classes should be 100%.
Equity Allocation Matrix for Active Choice
The maximum allowed equity investment will be determined by the equity allocation matrix described below. The equity allocation will go down according to the subscriber's age.
Age (years) | Max. Equity Allocation |
---|---|
Up to 50 | 75% |
51 | 72.50% |
52 | 70% |
53 | 67.50% |
54 | 65% |
55 | 62.50% |
56 | 60% |
57 | 57.50% |
58 | 55% |
59 | 52.50% |
60 & above | 50% |
Source: npscra.nsdl.co.in |
Auto Choice Option Under NPS
NPS provides another option for members who have less exposure to equity investments. In case of less asset allocation knowledge, a subscriber can select the Auto Choice option. Under this option, investments will be made in a life-cycle fund. A predefined portfolio will decide the portion of contribution invested throughout three asset classes in this option. At the earliest age of registration (18 years), the auto choice will include investing 50% of pension money in E Class, 30% in C Class, and 20% in G Class. Under this choice, the CRA system will select the scheme as well as the allocation ratio depending on the age of the Subscriber at the time of registration. Individuals' presence in equity and corporate debt appears to decline as they become older. There are three alternative alternatives accessible inside 'Auto Choice' based on the risk tolerance of the Subscriber - Aggressive, Moderate, and Conservative. The following funds are described in-depth:
LC75 - Aggressive Life Cycle Fund
This Life cycle fund allows for an equity investment cap of 75% of total assets. The equity investment exposure begins at 75% till the age of 35 and subsequently decreases according to the subscriber's age.
Age | Asset Class E | Asset Class C | Asset Class G |
---|---|---|---|
Up to 35 years | 75 | 10 | 15 |
36 years | 71 | 11 | 18 |
37 years | 67 | 12 | 21 |
38 years | 63 | 13 | 24 |
39 years | 59 | 14 | 27 |
40 years | 55 | 15 | 30 |
41 years | 51 | 16 | 33 |
42 years | 47 | 17 | 36 |
43 years | 43 | 18 | 39 |
44 years | 39 | 19 | 42 |
45 years | 35 | 20 | 45 |
46 years | 32 | 20 | 48 |
47 years | 29 | 20 | 51 |
48 years | 26 | 20 | 54 |
49 years | 23 | 20 | 57 |
50 years | 20 | 20 | 60 |
51 years | 19 | 18 | 63 |
52 years | 18 | 16 | 66 |
53 years | 17 | 14 | 69 |
54 years | 16 | 12 | 72 |
55 years & above | 15 | 10 | 75 |
LC50 - Moderate Life Cycle Fund
This Life cycle fund allows for an equity investment cap of 50% of total assets. The equity investment exposure begins at 50% till the subscriber is 35 years old and subsequently decreases as the subscriber's age increases.
Age | Asset Class E | Asset Class C | Asset Class G |
---|---|---|---|
Up to 35 years | 50 | 30 | 20 |
36 years | 48 | 29 | 23 |
37 years | 46 | 28 | 26 |
38 years | 44 | 27 | 29 |
39 years | 42 | 26 | 32 |
40 years | 40 | 25 | 35 |
41 years | 38 | 24 | 38 |
42 years | 36 | 23 | 41 |
43 years | 34 | 22 | 44 |
44 years | 32 | 21 | 47 |
45 years | 30 | 20 | 50 |
46 years | 28 | 19 | 53 |
47 years | 26 | 18 | 56 |
48 years | 24 | 17 | 59 |
49 years | 22 | 16 | 62 |
50 years | 20 | 15 | 65 |
51 years | 18 | 14 | 68 |
52 years | 16 | 13 | 71 |
53 years | 14 | 12 | 74 |
54 years | 12 | 11 | 77 |
55 years & above | 10 | 10 | 80 |
LC25 - Conservative Life Cycle Fund
This Life cycle fund allows for an equity investment maximum of 25% of total assets. The equity investment exposure begins at 25% till the age of 35 and subsequently decreases as the subscriber's age increases.
Age | Asset Class E | Asset Class C | Asset Class G |
---|---|---|---|
Up to 35 years | 25 | 45 | 30 |
36 years | 24 | 43 | 33 |
37 years | 23 | 41 | 36 |
38 years | 22 | 39 | 39 |
39 years | 21 | 37 | 42 |
40 years | 20 | 35 | 45 |
41 years | 19 | 33 | 48 |
42 years | 18 | 31 | 51 |
43 years | 17 | 29 | 54 |
44 years | 16 | 27 | 57 |
45 years | 15 | 25 | 60 |
46 years | 14 | 23 | 63 |
47 years | 13 | 21 | 66 |
48 years | 12 | 19 | 69 |
49 years | 11 | 17 | 72 |
50 years | 10 | 15 | 75 |
51 years | 9 | 13 | 78 |
52 years | 8 | 11 | 81 |
53 years | 7 | 9 | 84 |
54 years | 6 | 7 | 87 |
55 years & above | 5 | 5 | 90 |
How to change Auto/Active Choice in NPS?
To change your Auto or Active Choice option under NPS, you can follow the steps listed below:
- Visit www.cra-nsdl.com and sign in to your account using your User ID and IPIN.
- Now click on 'Transact Online' and select 'Change Scheme Preference'
- Now select your 'Tier Type' for which you want to make changes.
- Now choose the 'Scheme-preference type' and submit.
- Now select 'Scheme Preference Change' and select your scheme preference type as Active or Auto.
- Now click on 'Submit' and a confirmation screen will appear.
- Now click on 'Send OTP' and you will get an OTP on your registered mobile number.
- Enter the received OTP and click on Submit OTP.
- Once the OTP is verified, an Acknowledgement number will be displayed on your screen.