6 days ago

NPS Asset Classes and Active, Auto Choice Explained

NPS asset classes explained: How can you allocate your retirement savings under active and auto choice? · livemint.com

The National Pension System lets people invest their retirement savings in different types of investments.

These include company shares, corporate bonds, government bonds and some alternative investments.

People using Active Choice decide how much money goes into each type.

They must make sure all their selected allocations add up to 100 percent.

People who do not want to choose themselves can use Auto Choice.

Auto Choice changes the investment mix as the person gets older.

Usually, the share invested in equities becomes smaller with age.

NPS provides four life-cycle options with different levels of equity exposure.

Key facts

Asset classes: E, C, G and A: equity, corporate debt, government securities and alternative investments.
Active Choice: Subscribers select the Pension Fund Manager, scheme and allocation percentages.
Equity limit: Equity can account for up to 75% in Tier-I and up to 100% in Tier-II.
Alternative investment limit: Asset Class A has a maximum allocation of 5% and is available only in Tier-I.
Allocation requirement: Allocations across all selected asset classes must total 100%.
Auto Choice: A predefined life-cycle strategy changes asset allocation according to the subscriber’s age.
Auto Choice options: Life Cycle 75–High, Life Cycle 50–Moderate, Life Cycle 25–Low and Life Cycle–Aggressive.

livemint.com · 6 days ago