The National Pension System (NPS) offers subscribers several investment options to choose from. The first step is to select a Pension Fund Manager (PFM) from multiple options, each with its own approach to managing pension funds. After selecting the PFM, subscribers can decide on their preferred investment option, allowing individuals to tailor their NPS investments to suit their financial goals. There are two investment options available in NPS:
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Active Choice: In this type of investment choice, the subscriber has the right to actively decide how their contribution is to be invested, based on personal preference. The subscriber has to provide the PFM, Asset Class, as well as the percentage allocation to be done in each scheme of the PFM.
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Auto Choice: This option is for subscribers who do not have the required knowledge to manage their NPS investments. In this option, the investments will be made in a life-cycle fund. Here, the proportion of funds invested across three asset classes will be determined by a pre-defined portfolio, which would change as per the age of the subscriber. The subscriber can choose from three Life Cycle Fund Options named as LC 75, LC 50, and LC 25, which are also known as Aggressive Auto Choice, Moderate Auto Choice, and Conservative Auto Choice, respectively.
In NPS, there are four asset classes to choose from: Equity, Corporate Debt, Government Bonds, and Alternative Investment Funds. The proportion of funds invested across these asset classes will depend on the investment option chosen by the subscriber.
