1 week ago

NPS 100% Equity Option: Rules, Benefits and Investor Considerations

NPS 100% equity option explained: How it works, who should consider it and key rules · livemint.com

The National Pension System now allows some new schemes to invest all their money in shares.

This does not mean every NPS investor must choose 100% shares.

Investors can still use older schemes where equity exposure is limited to 75%.

Under the new framework, eligible non-government subscribers can hold several schemes at the same time.

For example, they can combine an equity scheme with government securities or corporate bonds.

Equity may offer stronger growth over time, but its value can rise and fall sharply.

Younger investors may have more time to handle these changes, while people near retirement may prefer less risky investments.

Investors must choose how future contributions are divided because NPS will not automatically reduce equity exposure.

They should also compare fees and consider the 15-year or age-60 vesting rule.

Key facts

Maximum equity exposure: Up to 100% under eligible Multiple Scheme Framework schemes; common schemes remain capped at 75%.
Eligible multiple-scheme users: Non-government subscribers, including corporate employees and self-employed individuals, can hold multiple schemes under one PRAN.
Alternative allocations: Subscribers can combine equity exposure with government securities or corporate bond schemes.
MSF fee limit: Multiple Scheme Framework schemes can charge fund management fees of up to 0.30% of assets under management.
Common-scheme fee comparison: Some common schemes charge around 0.09% of assets under management.
Minimum vesting period: MSF schemes have a minimum vesting period of 15 years or until the subscriber reaches age 60, whichever is earlier.
Automatic de-risking: NPS does not automatically reduce equity exposure as retirement approaches under MSF; subscribers must change future contribution allocations themselves.

livemint.com · 1 week ago