Govt Employees Get 2 New Auto Investment Options in NPS, UPS

The Pension Fund Regulatory and Development Authority (PFRDA) has expanded the investment choices available to central government employees under the National Pension System (NPS) and Unified Pension Scheme (UPS). With the introduction of two new Auto Choice options, subscribers now have a total of six different ways to invest their retirement savings.

Existing Investment Choices Under NPS, UPS

Until now, central government employees had four options to choose from. These included the Default Scheme, where contributions are invested based on a predefined allocation. There was also an option to invest fully in government securities, offering low risk.

Two Auto Choice plans were already available. The Life Cycle 25 (Low) plan allowed 25% equity exposure until the age of 35, reducing to 5% by age 55. The Life Cycle 50 (Moderate) plan offered 50% equity exposure until age 35, reducing to 10% by age 55. These options helped subscribers choose a plan based on their comfort with equity risk.

New Auto Choice Options Introduced

PFRDA has now added two more Auto Choice plans to further diversify options.

Life Cycle 75 (High)

This option provides 75% equity exposure until age 35. The equity portion gradually reduces to 15% by age 55. It is suitable for subscribers who can tolerate higher market fluctuations in exchange for potentially better long-term returns.

Life Cycle – Aggressive

This plan keeps 50% equity exposure until the age of 45 and then slowly reduces it to 35% by age 55. It maintains a higher equity base for a longer period, making it a choice for those looking for growth even during their mid-career years.

What Should UPS, NPS Subscribers Do Now?

Employees who do not wish to stay in the default scheme must now pick one of the five non-default investment options. They must also select one pension fund from the ten pension funds registered with PFRDA.

Subscribers are encouraged to check scheme performance and review pension fund track records before making a shift. Updated return data is available on the NPS Trust website.

Asset Allocation Rules

As per PFRDA’s guidelines for the government sector, the maximum limits are:

• Up to 65% in government securities
• Up to 45% in debt instruments
• Up to 10% in short-term debt
• Up to 25% in equity
• Up to 5% in asset-backed or miscellaneous investments

Read more: 8th Pay Commission Minimum Pay Calculation: A Look at ILC Norms and Past Trends.

Conclusion

With more investment choices now available, central government employees can better match their pension investments with their risk level and long-term goals. The new options offer more flexibility and cater to both conservative and growth-focused investors.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.