PFRDA Renames NPS Auto Choice Funds For Clarity: Here Is What’s Changing

The Pension Fund Regulatory and Development Authority (PFRDA) has lately announced several changes in the National Pension System’s (NPS) offerings. Be it the newly launched ‘Multiple Scheme Framework’, exposure draft to change exit and withdrawal rules, or a draft proposal to introduce three types of pension payouts, the efforts are to make NPS more attractive, flexible, and suitable for the different needs of subscribers. In continuation of this, the regulator has now renamed its existing schemes. Before MSF’s launch on October 1, 2025, NPS offered investment only under Tier I and Tier II schemes and offered Auto and Active choice of investment under them.

The investment is done based on one’s age within the pre-defined ratio of asset classes; however, the names of the schemes didn’t depict the investment patterns. According to the regulator’s latest notification, “The Balanced Life Cycle Fund (BLC) had a higher equity allocation at the ages of 45 and 55 years as compared to the LC 75 Fund, which is currently categorised as an Aggressive investment pattern. To address this inconsistency and enhance clarity for subscribers, PFRDA has decided to revise and rationalize the nomenclature of the Life Cycle Funds so that the names accurately reflect their risk–return profiles and equity allocation patterns.”

PFRDA changed the names for “simplicity, transparency, and uniformity” so that subscribers can easily understand the investment patterns of their scheme just by its name.  

Here are the details of the four investment options under Auto choice and the proposed change in names.

LC 25 (Conservative Life Cycle Fund) Changed To - ‘Life Cycle 25 – Low (5E / 55Y)’

• Life Cycle 25 – means maximum 25 per cent exposure to equity up to the age of 35 years

• Low – means low equity

• 5E / 55Y – means a maximum of 5 per cent equity exposure at the age of 55 years and above

(This is for preserving savings with steady growth)

LC 50 (Moderate Life Cycle Fund) Changed To - ‘Life Cycle 50 – Moderate (10E / 55Y)’

• Life Cycle 50 – maximum 50 per cent exposure to equity up to the age of 35 years

• Moderate – Moderate equity

• 10E / 55Y – means a maximum of 10 per cent equity exposure at the age of 55 years and above

(This option is for balancing growth and protection by taking moderate equity exposure.)

LC 75 (Aggressive Life Cycle Fund) Changed To - ‘Life Cycle 75 – High (15E / 55Y)’

• Life Cycle 75 – maximum 75 per cent exposure to equity up to the age of 35 years

• Moderate – High equity

• 15E / 55Y – maximum 15 per cent equity exposure at the age of 55 years and above

(This option under auto choice aims to accelerate wealth creation with high exposure to equity.)

Balanced Life Cycle Fund Name Is Changed To - ‘Life Cycle – Aggressive (35E / 55Y)’

• Life Cycle - Aggressive – maximum 50 per cent equity exposure up to the age of 45 years

• 35E / 55Y – maximum 35 per cent equity exposure at the age of 55 years and above

(Under this option, equity exposure is the highest for the longer term, and thus, it is renamed as an aggressive fund.)

The purpose of marking the investment pattern in the scheme’s name is to make it easier for investors to quickly understand and accordingly decide the suitable option.