New NPS investment: Save Rs 57 lakh more for retirement with new NPS Balanced Life Cycle Fund this way
NPS subscribers to invest 50% of their investments in equity funds for a longer period of up to 45 years, significantly higher than the current limit of 35 years offered in other schemes. Who should opt for the new NPS Balanced Life Cycle Fund? Will the Balanced Life Cycle Fund help you to build a bigger retirement corpus? ET Wealth Online decodes the new NPS Balanced Life Cycle Fund for NPS investors.
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What is the NPS Balanced Life Cycle Fund?
The recently introduced Balanced Life Cycle Fund is mostly similar to other auto investment allocation schemes under the NPS. The key factor that sets this scheme apart from others is the age threshold, after which the scheme's equity allocation will gradually decrease. Under the Balanced Life Cycle Fund, NPS subscribers' equity allocation of 50% will remain unchanged until they are 45. Corporate debt allocation (scheme C) will be 30% and G-sec (scheme G) exposure 20%. After reaching 45, the fund manager will decrease the equity allocation by 2% every year. So, in next 5 years the equity allocation will be reduced to 40% by the time subscriber reaches the age of 50. There onwards it is reduced by 1% each year and is capped at 35% for those over 55 years of age.
Allocation to corporate bond (Scheme C) will also gradually come down 2% annually from 30% at the age of 45 to 10% at the age of 55.
During the same period scheme G
