Under the NPS, all individual contributions are pooled into a pension fund. The fund is then invested into diversified portfolios comprising of government bonds, bills, corporate debentures and shares by PFRDA regulated professional fund managers as per the approved investment guidelines.  

There are four Asset Classes:

• Equity - Subscribers can invest upto 75% of their contribution here
• Corporate Bond – Subscribers can invest 100% of their contribution here
• Government Bond- Subscribers can invest 100% of their contribution here
• Alternative Infrastructure- Subscribers can invest up to 5% of their contribution here

The NPS scheme allows you to diversify your portfolio between equity and debt instruments and offers its subscribers two approaches to invest.

• Active Choice: If you choose this option you can actively decide as to how the NPS pension wealth is to be invested across Asset classes namely; Equity (up to 75%), Asset Class C (100%), Asset Class G (100%) and Asset Class A (5%). You will be allowed to change your asset allocation twice in a financial year.
  
  
• Auto Choice: 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 age of subscriber).  The equity exposure will automatically decrease as the age of subscriber increases.
  

  There are three different options available within 'Auto Choice' -

  • Aggressive – LC 75- Equity exposure up to 75%
  • Moderate – LC 50- Equity exposure up to 50%
  • Conservative – LC 25- Equity exposure up to 25%

There are 7 different Pension Fund Managers authorized by the PFRDA to manage the subscriber’s investments in the most efficient way. The Latest Returns by each of these seven managers are updated on a weekly basis. You can use this information as a base to decide which PFM you wish to select. Click here to check the latest returns