Types Of Investment Choices In NPS - Active Choice And Auto Choice

The National Pension Scheme, or NPS, is a popular retirement investment option in India. It allows subscribers to select different asset classes and investment options. So, today let us understand the different NPS investment options in detail.

NPS asset classes

Before selecting the type of NPS investment choices, it is important for the subscribers to select the available asset classes. These classes define the maximum allocation percentage of the funds to the different fund managers. Given below are the top four NPS asset classes:

• Asset Class - A

It includes instruments like InvITs, REITS, or MBS, and other alternative investment funds. It has a maximum allocation of 5%.

• Asset Class - G

It includes government bonds and related instruments. It has a maximum allocation limit of 100%.

• Asset Class - C

It includes corporate debt and other related instruments. It has a maximum allocation limit of 100%.

• Asset Class-E

It includes equity and other related instruments with a maximum allocation of 75%.

Pension Fund Managers or PFM in NPS

After selecting the asset class, the next step for the NPS subscribers is to select the PFM in NPS. These Pension Fund Managers invest the collected funds into asset classes based on the investment objective and guidelines. Further, PFMs conduct periodic reviews to check the performance of the underlying assets.

• ICICI Prudential Pension Fund Management Co. Ltd
• Aditya Birla Sun Life Pension Management Ltd
• HDFC Pension Management Co. Ltd
• UTI Retirement Solutions Ltd
• LIC Pension Fund Ltd
• SBI Pension Funds Pvt. Ltd
• Kotak Mahindra Pension Fund Ltd
• Axis Pension Fund Management Ltd
• Max Life Pension Fund Management Ltd
• Tata Pension Management Ltd

Takeaway

The active choice is the individual fund, while the auto choice is the lifecycle fund. NPS subscribers can go through all details and the four asset classes, i.e., Asset Class-E, Asset Class-C, Asset Class-G, and Asset Class-A.