Investment Options

Introduction

The NPS is a government-supported retirement savings scheme that provides financial security in old age. It offers a flexible and low-cost investment option for individuals looking to build a pension corpus.

Provision for Pointers

You have the option to select fund allocation pattern for your investment across various asset classes vide exercising (i) Active Choice (ii) Auto Choice.

Active Choice: This option allows you the freedom to design the portfolio by voluntarily distributing investments among 4 asset classes as below:

  • Equity (E): This is a 'High risk – High Return' option as the funds are invested in equity Subscriber can choose to invest up to 75% in this asset class.

  • Corporate Bonds (C): Funds are invested in fixed income bearing debt instruments.

  • Government Securities (G): Funds are invested in Government Securities.

  • Alternate Assets (A): Funds are invested in real estate and infrastructure funds. Maximum capping is 5% investment since this is an extremely risky investment.

Auto Choice- Life Cycle Fund: In case 'Active Choice' as described above is not selected, the contribution funds will be invested in a pre-defined proportion depending on your age. The exposure will be higher in equity at a younger age and will be moderated progressively to get a balance among high, medium and low risk investment.

For example, allocation in equity till the age of 36 years is 50% in "E" , 30% in "C" and 20% in "G" asset class. After the age of 36, asset allocation starts decreasing from "E" and "C" and increases in "G" till it reaches 10% in "E" & "C" and 80% in "G" asset class.

You have three pre-defined option under Auto Choice,

LC 75 (Aggressive)

LC 50 (Moderate)

LC 25 (Conservative)

You may select the Auto Choice investment option as per your risk appetite. LC stand for Life Cycle and the number represents the maximum equity exposure. Refer to the following table to understand your investment pattern as per your age.

If you choose Auto Choice LC 75 (Aggressive), till the age of 35 your equity exposure is maximum at 75%. As your age increases the equity exposures automatically decreases and Debt investment (Government Security and Corporate Bonds) automatically increases.

Apply For National Pension System

  • Select any CRA and proceed to open your NPS Account
  • Computer Age Management Services Ltd (CAMS) Apply Online
  • KFIN Technologies Private Limited Apply Online
  • Protean eGov Technologies Ltd (Formerly NSDL e-Governance Infrastructure Limited) Apply Online
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  • www.hdfcbank.com

Frequently Asked Questions

The best investment option in NPS depends on your risk profile. For higher returns, you may consider the Aggressive Life Cycle Fund (LC75), which has up to 75% equity allocation.

Yes, you can change your investment options in NPS. Subscribers are allowed to change their investment patterns twice in a financial year. You can switch units between schemes and change your pension fund managers. Always ensure your choices align with your financial goals.

The choice between Auto and Active in NPS depends on your investment knowledge and time. Auto choice adjusts your asset allocation based on age and is suitable for passive investors. Active choice allows you to decide the asset allocation, which is ideal if you can actively manage your portfolio.