Mumbai: Subscribers to the National Pension Scheme (NPS) can now choose separate pension managers for three asset classes—equity, government security, and corporate bonds, as per an update provided by the Pension Fund Regulatory and Development Authority. The option, however, has not been extended to alternative assets.
Hitherto, subscribers could choose only one pension manager for all the asset classes.
There are 10 pension funds in the country currently. These include seven private pension managers—Axis Pension Fund, Aditya Birla Sun Life Pension, HDFC Pension, ICICI Prudential Pension, Kotak Mahindra Pension, Max Life Pension, and Tata Pension Management. The government-owned pension managers are LIC Pension, UTI Pension and SBI Pension Management.
Subscribers can change asset allocation four times in a financial year.
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According to Mint research, had a subscriber chosen the best pension manager for each of the asset classes and invested in these equally over a five-year period, they would be getting an annualized return of 10.90%. This is higher than what any single pension manager could deliver. However, it’s difficult to predict which pension manager will perform well in the future.
“This facility is a good initiative for subscribers as it will provide flexibility from an investment perspective. This will also keep pension fund managers on their toes to keep delivering top-quartile fund performance so subscribers can continue to choose them. Also, since NPS is a long-term investment, subscribers should give time to pension fund managers to showcase their performance before making these choices,” said Sumit Shukla, Axis Pension Fund.
NPS was introduced in 2004, replacing the previously defined benefit system.
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Updated: 29 Nov 2023, 09:03 PM IST