NPS, UPS Updates: To make retirement planning easier and more flexible for government employees, the Pension Fund Regulatory and Development Authority (PFRDA) has made a major change. Pension regulator PFRDA has increased the number of existing investment options under the National Pension System ( NPS ) and Unified Pension Scheme ( UPS ). PFRDA has introduced two new auto choice options in the investment options, taking the total number of investment options to six for Central Government (CG) subscribers.
The new Auto Choice investment options include ‘Auto Choice – Life Cycle 75 – High (15E/55Y)’ and ‘Auto Choice – Life Cycle – Aggressive (35E/55Y).’ This move by PFRDA will directly benefit government employees, who will now have the flexibility to choose new investment options under the pension scheme. This means that employees will now be able to select a more accurate investment strategy based on their risk profile and preferences.
What did PFRDA change?
PFRDA has announced that a total of six investment options will now be available to central government employees. Previously, this number was only four. The addition of two new Auto Choice Life Cycle options has brought the total to six. These two options are available to investors willing to take on a little more risk to achieve higher returns over the long term.
Under the Auto Choice Life Cycle 75 High (15E/55Y), 75% of a subscriber’s contributions will be invested in equities until they reach age 35. Thereafter, this will gradually reduce to 15% by the time they reach age 55. This limit will remain in place until they exit the scheme.
Auto Choice – Life Cycle 50
Meanwhile, under Auto Choice Life Cycle – Aggressive (35E/55Y), 50% of a subscriber’s contribution will be invested in equities until they reach age 45, and then gradually reduced to 35% by the time they reach age 55. This will remain the case until exit. The higher equity floor differentiates this option from existing options.
It is designed for subscribers who want a growth-oriented portfolio even in their mid-career. Currently, there are three Auto Choice options in addition to the default scheme: Active Choice, Auto Choice – Life Cycle 25 – Low (5E/55Y), and Auto Choice Life Cycle 50 – Moderate (10E/55Y).