Big changes in NPS investment rules for central govt employees — here’s what NPS and UPS subscribers must know

Central Government Employees Get More Control Over Retirement Funds

The Pension Fund Regulatory and Development Authority (PFRDA) has expanded the number of investment choices for National Pension System (NPS) and Unified Pension Scheme (UPS) subscribers, giving central government employees more flexibility in managing their retirement funds.

Increased Investment Options

PFRDA has increased the number of investment choices from four to six, including two new auto investment choice options that offer higher equity exposure for those willing to take more market-linked risk for potentially higher long-term returns.

Default Scheme Explained

• Under the scheme, contributions are invested as per the predefined asset allocation pattern managed by three pension funds.
• The Default Scheme was the most popular option among government employees, with about 96% of central government subscribers invested in it.

New Investment Options

Government subscribers can now choose from six investment options:

• Default Scheme – the usual pre-set allocation managed by three pension funds
• Active Choice (100% G-Sec) – for those who prefer complete safety
• Auto Choice LC 25 – Low – 25% equity till age 35, tapering to 5% by age 55
• Auto Choice LC 50 – Moderate – 50% equity till age 35, tapering to 10% by age 55
• Auto Choice LC 75 – High – 75% equity till age 35, tapering to 15% by age 55
• Auto Choice LC – Aggressive – 50% equity till age 45, tapering to a relatively high 35% by age 55

What NPS Subscribers Need To Do

Employees who wish to move away from the Default Scheme must select one of the five non-default investment options and choose one pension fund from the ten PFRDA-registered fund managers.

PFRDA has advised subscribers to review scheme performance and take informed decisions. Updated returns of schemes and pension funds are available on the NPS Trust website.

New Options Active on CRA Platforms

The two new choices are already active on the Central Recordkeeping Agency (CRA) platforms, meaning government employees can start selecting the new options right away.