Mumbai, India – National Pension System (NPS) subscribers have the responsibility of choosing their Pension Fund Manager (PFM) and scheme preference upon registration with the Central Recordkeeping Agency (CRA) system under NPS. With various PFMs available within the NPS framework, subscribers have the option to choose between investment options, namely Auto or Active, and allocate their investments among four asset classes: Equity, Corporate Debt, Government Bonds, and Alternative Investment Funds.
In the compulsory Tier-1 account, NPS-Scheme E offers long-term growth potential through investments in equities. This makes for an attractive choice for individuals looking to build a solid retirement account.
As of January 31, 2024, several PFMs oversee significant assets in the NPS. For instance, SBI Pension Funds Private Limited manages assets totaling Rs 15,768.59 crore, with its top five holdings including Reliance Industries, HDFC Bank Ltd., ICICI Equity, Infosys, and Larsen And Toubro. Similarly, other PFMs like LIC Pension Fund Limited, UTI Retirement Solutions Limited, ICICI Prudential Pension Funds Management Company Limited, Kotak Mahindra Pension Fund Limited, HDFC Pension Management Company Limited, Birla Sunlife Pension Management Limited, Tata Pension Management Limited, MAX LIFE Pension Management Limited, Axis Pension Management Limited, and DSP Pension Management Limited also manage substantial assets within the NPS.
NPS subscribers are faced with the choice between active choice and auto choice for their investment preference. Under the active choice option, subscribers have the freedom to decide how their contributions are invested by specifying the PFM, asset class, and percentage allocation for each scheme offered by the PFM. On the other hand, the auto choice option directs investments towards a life-cycle fund, which automatically allocates funds across three asset classes based on a predetermined portfolio that adjusts according to the subscriber’s age. Within the auto choice option, subscribers can choose between three distinct options—Aggressive, Moderate, and Conservative.
Overall, NPS subscribers have a diverse range of investment options and PFMs to choose from, providing flexibility and the potential for long-term financial growth as they plan for retirement.