The Pension Fund Regulatory and Development Authority (PFRDA) has introduced a new investment fund for members of the National Pension System (NPS).
This fund is called the Balanced Life Cycle Fund (BLS). With this fund, NPS members can invest up to 50% of their total contributions in equity until they turn 45 years old.
This change offers a chance to earn more profits while keeping investments safe.
Benefits for Private Sector and Individuals
According to a recent PFRDA circular, the BLS fund is specifically designed for private sector customers, giving them more balanced investment options.
Employees who set up corporate NPS accounts through their companies, as well as individuals who open their accounts, will have the opportunity to invest in this fund.
Current Investment Options
Currently, NPS investments are made in various areas, including equity, government securities, corporate bonds, and other alternative funds.
Members can invest up to 50% in equity until the age of 35 in the LC-50 option under the Auto Choice Fund.
The new BLS fund allows for a higher equity investment until the age of 45.
Here are the different investment allocations:
Conservative Fund (LC-25): 25% in equity
Moderate Fund (LC-50): 50% in equity
Aggressive Fund (LC-75): 75% in equity
Balanced Fund: 50% in equity until age 45
Investment Choices Available
Active Choice Fund: In this fund, investors can allocate up to 75% of their contributions to equity until they turn 50.
The remaining 25% must go into government securities, corporate bonds, and alternative investment funds. After age 60, the equity allocation decreases to 50%.
Auto Choice Option: Also known as the Life Cycle Fund (BLC), this option offers three choices for investment in equity based on risk until age 35.
The new BLS fund is the fourth option added to this system.
Benefits for Government Employees
Government employees can also benefit from the Integrated Pension Scheme.
This option is suitable for those who are willing to take risks for potentially higher returns, with no guaranteed pension.
They can invest at a rate of 50% of their average salary from the last 12 months of service. Customers who opt for default investments will receive a guaranteed pension.
