Good news for those investing in the National Pension System (NPS) — starting October 1, a new plan will let subscribers invest up to 100% in equity (shares).
This option will be available to all NPS investors except government employees.
The Pension Fund Regulatory and Development Authority (PFRDA) has announced this new offering under the Multiple Scheme Framework (MSF).
Subscribers Will Get Customised Retirement Plans
Under this scheme, NPS subscribers will get customised investment options to suit their retirement goals. The PFRDA has issued a circular explaining the details.
It says, “MSF has been developed with a new structure where subscribers will be identified using their Permanent Account Number (PAN) by all **Central Record-Keeping Agencies (CRAs).”
Pension fund managers will now be able to create schemes tailored to meet different subscriber needs.
Two Investment Options: Low and High Risk
The MSF will offer two types of plans — moderate risk and high risk. The high-risk plan will allow 100% equity investment, whereas the current limit is 75%.
Fund managers can also offer low-risk options if they choose. As per the circular, “Subscriber risk profiles will be determined using social and economic factors.”
Each scheme will also feature a risk-o-meter to help investors understand the level of risk involved.
Minimum Vesting Period Set at 15 Years
All these schemes must include “NPS” in their name, and their objectives must be clearly stated.
The minimum investment period (vesting period) under these schemes will be 15 years. Subscribers can access the full value of their investment after turning 60 or upon retirement.
The PFRDA also mentioned that total charges for the plan will be capped at 30% of the yearly Assets Under Management (AUM).
MSF to Launch on NPS Day
Experts believe that the MSF will give subscribers greater control and more choices for managing their retirement savings.
It will also promote innovation and competition among pension fund companies.
The Multiple Scheme Framework will officially launch on October 1, which is also observed as NPS Day.
