PFRDA Launches Balanced Lifecycle Fund For NPS Private Sector Subscribers

On the occasion of Pension Diwas, celebrated on October 1, the Pension Fund Regulatory and Development Authority (PFRDA) has launched the Balanced Lifecycle Fund (BLC), a new option designed specifically for private sector subscribers of the National Pension System (NPS). This introduction aims to enhance the investment choices available under the NPS, particularly for those under the All-Citizen Model and Corporate NPS.

Also Read: NPS Diwas: Why NPS Should Be A Key Part Of Your Financial Plan

The BLC focuses on providing growth through a mix of equity and debt, ensuring that subscribers can benefit from higher returns while managing risks associated with ageing. One of the key features of the BLC is its automatic rebalancing of asset classes, making it easier for subscribers to manage their investments. This approach allows for greater equity exposure during the working years, which can lead to a more substantial retirement corpus over time.

Under the BLC, equity allocation remains at 50 per cent until the age of 45. Unlike the existing Moderate Lifecycle Fund (LC-50), where equity tapering begins at age 35, the BLC starts reducing equity exposure at age 45. By age 55, the equity allocation is capped at 35 per cent, providing a balanced approach to risk and growth. By age 55, the equity allocation is limited to 35 per cent, resulting in a balanced approach to risk and growth.

Rapid Growing Segment in NPS

The private sector has emerged as the fastest-growing section in the NPS ecosystem, with assets under management (AUM) totaling around Rs 2.6 lakh crore as of mid-September. Between March 2020 and March 2024, the non-government sector's AUM increased by an impressive 25 per cent over the previous four years. Year-on-year growth for private sector NPS stands at an impressive 40 per cent as of September 15.

• With the addition of the Balanced Lifecycle Fund, subscribers now have four lifecycle fund options available to them:

• Conservative Lifecycle Fund (LC-25): Up to 25 per cent equity allocation

• Moderate Lifecycle Fund (LC-50): Up to 50 per cent equity allocation

• Aggressive Lifecycle Fund (LC-75): Up to 75 per cent equity allocation

• Balanced Lifecycle Fund (BLC): New option maintaining up to 50 per cent equity allocation until age 45

Lifecycle funds are asset allocation options accessible through the NPS's 'Auto Choice' investing plan, with asset allocation adjusted annually based on the subscriber's age and risk profile. Lifecycle funds have grown in popularity among private sector customers, with around 65 per cent choosing them as one of their investing options.