Summary of this article
NPS Scheme E has delivered strong long-term returns—15.07% (7-year) and 17.53% (5-year).
It outperformed 47 out of 181 funds over seven years.
Proposals like higher withdrawal limits and easier exit rules, can make NPS more attractive.
Equity schemes under the National Pension System (NPS) have impressed investors time and again with competitive market-beating returns. The Scheme E (equity scheme) under the NPS has delivered wonderful returns over the long term. These schemes have outshone 26 per cent (47 out of 181) of diversified actively-managed equity funds over the seven-year period. Over the five years, NPS Scheme E has outperformed 31 per cent (66 out of 211) of the equity mutual fund schemes.
Scheme E under NPS has given 15.07 per cent and 17.53 per cent returns, on an average, over the seven and five-year periods, respectively, according to data from NPS Trust. During the same time period, equity mutual funds have given 17.07 per cent and 19.77 per cent returns over the seven- and five-year periods, respectively, according to data from Ace Mutual Fund.
For this study, we considered equity funds under the large cap, mid cap, small cap, large & mid cap, multi cap, flexi cap, tax saving (ELSS funds), focused funds, contra, and value funds.
Coming to NPS, currently, there are 11 pension fund managers. The largest five pension fund managers in descending order of their assets are HDFC Pension Fund (Rs 70,676 crore), ICICI Pru Pension Fund (Rs 25,601 crore), SBI Pension Fund (Rs 25,483 crore), LIC Pension Fund (Rs 7,503 crore), and Ais Pension Fund (Rs 5,315 crore).
Over the seven years, NPS Scheme E has outperformed some of the big schemes across diversified equity mutual funds, namely, Mirae Asset Large Cap Fund (AUM of Rs 41,088 crore), HDFC Large Cap Fund (Rs 39,779 crore), Axis Large Cap Fund (Rs 33,827 crore), Axis Tax Saver Fund (Rs 35,172 crore), UTI FlexiCap Fund (Rs 25,757 crore), SBI Flexicap Fund (Rs 23,168 crore). Here, we have named only those schemes managing assets over Rs 20,000 crore.
Similarly, over the five-year period, NPS outperformed some of the large equity mutual fund schemes like Kotak Flexicap Fund, holding massive assets worth Rs 56,040 crore, as of October 31, 2025. Another huge fund, SBI Large Cap Fund, followed with assets worth Rs 54,688 crore.
Recently, the Pension Fund Regulatory and Development Authority (PFRDA) chairman, S. Ramann, has proposed to increase the withdrawal limit under NPS from the current 60 per cent to 80 per cent of the corpus. He announced this at the ICC Conclave on NPS held in Mumbai on November 27, 2025.
He has also proposed permitting an early exit from the system. Besides, PFRDA is also contemplating the removal of the current lock-in requirement.
