New Rule on NPS: Investors Now Have the Option to Choose 3 Pension Fund Managers – Here's How They Benefit


Investors in the National Pension System (NPS) have received positive news with a new rule introduced by the pension regulator, PFRDA (Pension Fund Regulatory and Development Authority). In a recent circular, PFRDA announced that NPS subscribers can now opt for up to three pension fund managers, each managing different asset classes.

NPS Investment in Different Asset Classes: NPS subscribers can diversify their investments across various asset classes, including Equity (E), Government Bond (G), Corporate Bond (C), and Alternate Asset Class (A).

Key Details of the New Rules: Previously, NPS subscribers were limited to selecting a single fund manager, who then managed the investments across different asset classes. With the new rule, subscribers can now choose different fund managers for each specific asset class.

Conditions to Note: The introduction of this facility comes with specific conditions set by PFRDA:

  1. Subscribers must opt for the active choice for asset allocation, not the auto mode.
  2. This facility is applicable only to equity, government security, and corporate bond assets, excluding alternate asset classes.
  3. Available for the existing All Citizen Model (Tier-I), NPS corporate model (Tier-I), and Tier-II (All subscribers) categories. Government employees with Tier-1 NPS accounts are excluded; they can only benefit if they have a Tier-2 account.
  4. New investors joining the scheme can utilize this facility three months after registration.

Benefits of the New Facility: Consider a scenario where an investor has chosen HDFC Pension Fund as the manager for NPS equity and bond investments. Previously, this same fund manager would oversee both assets. However, with the new rule, investors can select different fund managers for equities and bonds, providing the flexibility to choose managers that align better with their assets.

Additional Facility – Systematic Lump Sum Withdrawal: PFRDA recently introduced another facility allowing subscribers to opt for systematic lump sum withdrawal. Subscribers can now withdraw 60% of their pension corpus monthly, quarterly, half-yearly, or annually until the age of 75.

These developments enhance flexibility and choice for NPS investors, allowing them to tailor their investment strategies to better suit their financial goals."

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