The Pension Fund Regulatory and Development Authority (PFRDA) is planning to introduce a new scheme under NPS that will allow subscribers to invest 50% of their portfolio in equity funds until 45 years. The scheme may be named as NPS Balance Life Cycle Fund.
Note: This scheme is yet to be launched. Exact details will be known after that.
According to PFRDA Chairman Deepak Mohanty, the new scheme will be launched in July or August, Business Standard reported. It will help subscribers effectively manage both risks and returns. This scheme will allow subscribers to invest up to 50% of their funds in equities until they reach the age of 45.
Currently, the NPS permits 50% equity investment only until the age of 35, after which the allocation gradually shifts towards debt funds.
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At PFRDA’s Annual Felicitation Program for Atal Pension Yojana (APY) in New Delhi, Chairman Deepak Mohanty announced that the new scheme will offer an additional option in the auto choice, allowing for a maximum equity allocation of up to 50%.
This allocation will only start tapering after subscribers reach the age of 45, enabling them to build a larger corpus in their retirement fund.
Mohanty added that current NPS subscribers can switch to this new scheme, and all pension funds will offer the revised NPS Balance Lifecycle scheme to their subscribers.
Also Read: Coming soon, Balanced Life Cycle Fund under NPS: How will it work?
Mohanty also mentioned that an NPS scheme offering assured returns has been in development for some time. However, he highlighted that setting a specific launch timeline is challenging but suggested they might establish one as the project nears completion.
The combined total corpus of NPS and APY currently stands at Rs 12.4 trillion, with the PFRDA aiming to reach Rs 15 trillion in FY25.
Most of these assets under management (AUM) belong to the NPS, while APY constitutes a smaller portion amounting to Rs 38,000 crore. Mohanty also expressed his intention to expand NPS outreach through regional rural banks.
Also Read: FM Nirmala Sitharaman backs APY, says this guaranteed pension scheme has given 9.1% returns
Regarding the Atal Pension Yojana, Mohanty highlighted that 1.2 crore new subscribers were enrolled in FY24, with a target of 1.3 crore subscribers for the current financial year.
As of June 15, 2024, the Atal Pension Yojana, which serves the unorganized sector, has total Assets Under Management (AUM) amounting to Rs 37,850 crore.
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