What Are The Investment Options Under NPS?

While subscribing to the CRA system under NPS, an NPS subscriber must select a Pension Fund Manager (PFM) as well as a scheme type. The subscribers have a number of alternatives from which to pick. Multiple PFMs, investment choices (Auto or Active), and four asset classes (Equity, Corporate Bond, Government Bond, and Alternative Infrastructure Funds) are available in NPS. A subscriber is first required to select a PFM and then choose from one of the following scheme options. The subscriber must first select one PFM from the below list:Birla Sun Life Pension Management LimitedHDFC Pension Management Company LimitedICICI Prudential Pension Funds Management Company LimitedKotak Mahindra Pension Fund LimitedLIC Pension Fund LimitedSBI Pension Funds Private LimitedUTI Retirement Solutions LimitedNPS Investment OptionsThe National Pension System (NPS) gives investors two options i.e. Auto Choice and Active Choice for investing in four asset classes: equities, government securities, corporate debt, and alternative investment funds (AIFs).Active Choice Option In NPSBased on your risk behaviour and personal preferences, you can allocate the funds according to your choice. The PFM, Asset Class, and per cent of allocation in each scheme of the PFM can be specified by the subscriber according to his or her choice. Under this option, there are four asset classes: equity, corporate debt, government bonds, and alternative investment funds, from which the allocation must be stated under a single PFM.Asset class E - Equity and related instrumentsAsset class C - Corporate debt and related instrumentsAsset class G - Government Bonds and related instrumentsAsset Class A - Alternative Investment Funds including instruments like CMBS, MBS, REITS, AIFs, Invlts etc.NPS subscribers can choose multiple Asset Class under a single PFM using the active choice option, as shown below:Up to the age of 50, you can invest up to 75 per cent of your overall asset allocation in equity.For Alternative Investment Funds, the percentage contribution value should not exceed 5%.The overall allocation throughout E, C, G, and A asset classes should be 100%.Advertisement The maximum allowed equity investment will be determined by the equity allocation matrix described below. The equity allocation will go down according to the subscribers age.Age (years)Max. Equity AllocationUp to 5075%5172.50%5270%5367.50%5465%5562.50%5660%5757.50%5855%5952.50%60 & above50%Source: npscra.nsdl.co.in NPS provides another option for members who have less exposure to equity investments. In case of less asset allocation knowledge, a subscriber can select the Auto Choice option. Under this option, investments will be made in a life-cycle fund. A predefined portfolio will decide the portion of contribution invested throughout three asset classes in this option. At the earliest age of registration (18 years), the auto choice will include investing 50% of pension money in E Class, 30% in C Class, and 20% in G Class. Under this choice, the CRA system will select the scheme as well as the allocation ratio depending on the age of the Subscriber at the time of registration. Individuals presence in equity and corporate debt appears to decline as they become older. There are three alternative alternatives accessible inside Auto Choice based on the risk tolerance of the Subscriber - Aggressive, Moderate, and Conservative. The following funds are described in-depth: This Life cycle fund allows for an equity investment cap of 75% of total assets. The equity investment exposure begins at 75% till the age of 35 and subsequently decreases according to the subscribers age.AgeAsset Class EAsset Class CAsset Class GUp to 35 years75101536 years71111837 years67122138 years63132439 years59142740 years55153041 years51163342 years47173643 years43183944 years39194245 years35204546 years32204847 years29205148 years26205449 years23205750 years20206051 years19186352 years18166653 years17146954 years16127255 years & above151075 This Life cycle fund allows for an equity investment cap of 50% of total assets. The equity investment exposure begins at 50% till the subscriber is 35 years old and subsequently decreases as the subscribers age increases.AgeAsset Class EAsset Class CAsset Class GUp to 35 years50302036 years48292337 years46282638 years44272939 years42263240 years40253541 years38243842 years36234143 years34224444 years32214745 years30205046 years28195347 years26185648 years24175949 years22166250 years20156551 years18146852 years16137153 years14127454 years12117755 years & above101080 This Life cycle fund allows for an equity investment maximum of 25% of total assets. The equity investment exposure begins at 25% till the age of 35 and subsequently decreases as the subscribers age increases.AgeAsset Class EAsset Class CAsset Class GUp to 35 years25453036 years24433337 years23413638 years22393939 years21374240 years20354541 years19334842 years18315143 years17295444 years16275745 years15256046 years14236347 years13216648 years12196949 years11177250 years10157551 years9137852 years8118153 years798454 years678755 years & above5590 To change your Auto or Active Choice option under NPS, you can follow the steps listed below:Visit www.cra-nsdl.com and sign in to your account using your User ID and IPIN.Now click on Transact Online and select Change Scheme PreferenceNow select your Tier Type for which you want to make changes.Now choose the Scheme-preference type and submit.Now select Scheme Preference Change and select your scheme preference type as Active or Auto.Now click on Submit and a confirmation screen will appear.Now click on Send OTP and you will get an OTP on your registered mobile number.Enter the received OTP and click on Submit OTP.Once the OTP is verified, an Acknowledgement number will be displayed on your screen.