Want maximum returns from NPS? Know best-performing NPS funds, how to choose pension fund manager
NPS also offers a lot of flexibility. Investors can choose their asset mix by dividing the corpus among four different types of funds. They can also change this asset mix up to four times a year.
The choice of pension fund managers has also broadened.
Now, there are 10 pension fund managers to choose from. Investors are also allowed to switch their pension fund once in a year. From this year onwards, the Pension Fund Development and Regulatory Authority (PFRDA) has allowed investors to spread their investments across different fund managers.
You can invest in the equity fund of pension fund A, the gilt fund of pension fund B, and the corporate bond fund of pension fund C. The only restriction is that the alternative investment fund (allocation is capped at 5%) has to be from any of the pension funds selected by the investor.
PFRDA Chairman Deepak Mohanty says this new feature adds to the flexibility of the NPS and will make the pension scheme more attractive for investors. Our cover story identifies the best performing NPS funds to help investors decide which pension fund manager they should go with.
Investors should not look at annualised returns in isolation. These are point-to-point returns and may not give the correct picture. The SIP returns, which are calculated using the internal rate of return formula, will be a better indicator, especially if you intend to invest through monthly SIPs.
The equity fund of Kotak Pension Fund, for instance, has done consistently well, while the gilt fund of LIC Pension Fund has been a long-term outperformer.
