Archive · 27 Aug 2026
NPS Asset Classes and Active, Auto Choice Explained
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.
NPS offers four asset classes: equity, corporate debt, government securities and alternative investments.
Under Active Choice, subscribers decide their Pension Fund Manager, scheme and asset allocation.
Equity can reach 75% in Tier-I and 100% in Tier-II, while alternatives are capped at 5%.
Asset Class A, covering investments such as REITs and InvITs, is available only in Tier-I.
Auto Choice adjusts investment allocations according to age through four life-cycle strategies.
- Who
- NPS subscribers choosing how to invest their retirement savings.
- What
- An explanation of NPS asset classes and the Active Choice and Auto Choice investment options.
- When
- Auto Choice changes allocations as the subscriber ages; no publication or event date is specified.
- Where
- Within National Pension System investment accounts; no physical location is specified.
- Why
- To help subscribers choose an asset allocation or use an age-based investment strategy.
- 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.