NPS And UPS: PFRDA Enhances Choice Of Investment For Central Government Subscribers

The Pension Fund Regulatory and Development Authority (PFRDA) expands investment choice for central government subscribers. According to the circular, until now, central government subscribers in the National Pension System (NPS) and Unified Pension Scheme (UPS) had only four investment options, but now they will have two more investment options. This brings the total number of investment options from four to six. The new investment choices offer subscribers the option to have up to 75 per cent exposure to equity.

Here are the details of the existing and new investment options for central government subscribers.

Existing Options

Default Scheme – Predefined asset allocation

Active Choice – 100 per cent in government securities

Auto Choice – Life Cycle 25 - Low (5E/55Y) – up to 25 per cent equity exposure till the age of 35 and then tapering till it reaches 5 per cent at the age of 55

Auto Choice – Life Cycle 50- Moderate (10E/55Y) – a maximum of 50 per cent equity exposure up to the age of 35, tapering reduces equity exposure till it reaches 10 per cent at the age of 55

New Options

Auto Choice – Life Cycle 75 - High (15E/55Y)

A maximum of 75 per cent equity exposure up to the age of 35, tapering starts thereafter till the exposure reaches 15 per cent at the age of 55

Auto choice – Life Cycle - Aggressive (35E/55Y)

Under this, the equity exposure can go up to 50 per cent till the age of 45 years, then tapering starts till it reaches 35 per cent at the age of 55 years

In all the options, tapering stops at the age of 55 years.

It is worth noting here that at present, around 96 per cent of the central government subscribers are invested in the default scheme, and only 4 per cent of subscribers hold the other schemes.

Per the PFRDA circular, subscribers opting for any scheme other than the default option need to select one pension fund from the available 10 pension funds. They can opt for the new options as the central record-keeping agencies (CRAs) have started offering this option.

Lately, PFRDA has announced several changes in NPS and its framework. In October, PFRDA changed the nomenclature of the Auto Choice schemes to denote asset allocation and age-based tapering structure. Now, it allows central government subscribers to take higher exposure (up to 75 per cent) to equities through increased investment options, and all non-government subscribers have the option to invest up to 100 per cent in equities through schemes in the multiple scheme framework (MSF). In short, it aims to improve investment choices across different NPS models, increase flexibility, and attract more people to the social security scheme.

Although NPS does not guarantee a return, as of December 1, 2025, its return since inception is over 13 per cent.