NPS Investment Option - Auto Choice Vs Active Choice

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Aditya Birla Sun Life Pension Fund Management Limited.

Aditya Birla Group

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NPS INVESTMENT CHOICES

The NPS subscriber has flexibility to select among the Fund Managers (PFM). Aditya Birla Sun Life Pension Fund Management Limited is a pension fund manager appointed by PFRDA, for managing pension funds under NPS.

There are two types of investment options available under the NPS:

Active Choices

Under this option, the subscriber has the flexibility to decide how their pension wealth is to be invested across four asset classes:

Asset class E – Equity and equity-related instruments

Asset class C – Corporate debt and debt-related instruments

Asset class G – Government bond and other government back securities

Asset class A – Alternative investments like Commercial Mortgage-Backed Securities (CMBS), Real Estate Investment Trusts (REITS), Infrastructure Investment Trusts (InvIts), venture capital funds etc.

The subscriber can allocate their funds across these asset classes in a percentage-wise manner. The subscriber can change their asset allocation once a year.

There are some rules in this investment choice as below:

The contributions to asset class A at any time cannot be more than 5% of the total subscriber contribution

Any subscriber can allocate a maximum of 75% of their investment to asset class E.

Auto Choice

Under this option, the investment mix is determined by the subscriber’s age. The investment in equity is higher when the subscriber is younger, and it reduces as they grow older. The mix of investments in equity, corporate bonds, and government securities is automatically adjusted based on the age of the subscriber. Under the Auto choice option there are further sets of three risk based investment options LC25, LC50 and LC75.

LC25 – Conservative Life Cycle fund

The LC25 has a cap of 25% on the total asset allocation in asset class E. The exposure to equity investments reduces gradually as the subscriber grows older.

Asset class distribution at a different age for LC25 is as under

Age	Asset Class E	Asset Class C	Asset G
Up to 35 years	25%	45%	30%
36	24%	43%	33%
37	23%	41%	36%
38	22%	41%	36%
39	21%	37%	42%
40	20%	35%	45%
41	19%	33%	48%
42	18%	31%	51%
43	17%	29%	54%
44	16%	27%	57%
45	15%	25%	60%
46	14%	23%	63%
47	13%	21%	66%
48	12%	19%	69%
49	11%	17%	72%
50	10%	15%	75%
51	9%	13%	78%
52	8%	11%	81%
53	7%	9%	84%
54	6%	7%	87%
55	5%	5%	90%

LC50 – Moderate Life Cycle Fund

The LC50 has a cap of 50% on the total asset allocation in asset class E. The exposure to equity investments reduces gradually as the subscriber grows older

Asset class distribution at different age for LC50 is as under

Age	Asset Class E	Asset Class C	Asset G
Up to 35 years	50%	30%	20%
36	48%	29%	23%
37	46%	28%	26%
38	44%	27%	29%
39	42%	26%	32%
40	40%	25%	35%
41	38%	24%	38%
42	36%	23%	41%
43	34%	22%	44%
44	32%	21%	47%
45	30%	20%	50%
46	28%	19%	53%
47	26%	18%	56%
48	24%	17%	59%
49	22%	16%	62%
50	20%	15%	65%
51	18%	14%	68%
52	16%	13%	71%
53	14%	12%	74%
54	12%	11%	77%
55	10%	10%	80%

LC75 – Aggressive Life Cycle Fund

The LC75 has a cap of 75% on the total asset allocation in asset class E. The exposure to equity investments reduces gradually as the subscriber grows older

Asset class distribution at different age for LC75 is as under

Age	Asset Class E	Asset Class C	Asset G
Up to 35 years	75%	10%	15%
36	71%	11%	18%
37	67%	12%	21%
38	63%	13%	24%
39	59%	14%	27%
40	55%	15%	30%
41	51%	16%	33%
42	47%	17%	36%
43	43%	18%	39%
44	39%	19%	42%
45	35%	20%	45%
46	32%	20%	48%
47	29%	20%	51%
48	26%	20%	54%
49	23%	20%	57%
50	20%	20%	60%
51	19%	18%	63%
52	18%	16%	66%
53	17%	14%	69%
54	16%	12%	72%
55	15%	10%	75%

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