Pension Fund

As for the types of investment, there are 2
options available under the NPS:

Active Choices

Under this option, the subscriber has the flexibility to decide how their pension wealth is to be invested across four asset classes:

Auto Choices

Under this option, the mix of investments in equity, corporate bonds, and government securities is determined and automatically adjusted based on the age of the subscriber and risk-mitigation factors.

When the subscriber is young, the investment in equity is higher. And it decreases gradually as they grow older.

Younger investors have a longer time horizon (many years until retirement), allowing them to recover from short-term market volatility and benefit from the higher growth potential of equities.

As an investor gets older and closer to retirement, preserving the accumulated corpus becomes more important than aggressive growth, as there is less time to compensate for market downturns.

Under the Auto choice option there are further sets of three risk based investment options referred to as LC25, LC50 and, LC75. Here’s a breakdown for each:

LC25 - Conservative Life Cycle fund

The LC25 has a cap of 25% on the total asset allocation in asset class E. The exposure to equity investments reduces gradually as the subscriber grows older.

Asset class distribution at different age for LC25 is as under

Age	Asset Class E	Asset Class E	Tier II
Up to 35 years	25%	25%	25%
40	20%	20%	20%
45	15%	15%	15%
50	10%	10%	10%
55	5%	5%	5%

NPS Investment Choices

Active Choices

Under this option, the subscriber has the flexibility to decide how their pension wealth is to be invested across four asset classes:

The subscriber can allocate their funds across these asset classes in a percentage-wise manner. The subscriber can change their asset allocation once a year.

Auto Choices

LC25 - Conservative Life Cycle fund

Asset class distribution at different age for LC25 is as under