NPS New Norms: Investors Can Choose Three Pension Fund Managers

The Pension Fund Regulatory and Development Authority (PFRDA) has introduced new norms, as per which National Pension System (NPS) subscribers have the option to select up to three fund managers for various asset classes. 

Typically, NPS India is a long-term, voluntary investment plan for retirement under the purview of the PFRDA and the Central government. The system encourages individuals to invest in a pension account during their employment at regular intervals. 

The subscribers can withdraw a certain percentage of the corpus after retirement. As an NPS account holder, an individual will receive the remaining monthly pension amount after retirement. 

Under the old tax regime, investors get a tax benefit of up to Rs.1,50,000 under Section 80C of the Income-Tax Act (ITA), 1961 and an additional exclusive benefit of up to Rs 50,000 under Section 80CCD (1B).

Earlier, a single pension fund manager was responsible for all asset classes. Now, subscribers can choose separate fund managers for equity, corporate bonds, government bonds, and alternate asset classes, giving a boost to customise investments per each category’s performance. 

Subscribers who have opted for active choice in asset allocation have the availability of this facility, and not auto mode, in which case asset distribution is based on an investor’s age. This facility is available to existing subscribers under the NPS All Citizen Model (Tier-I), NPS Corporate Model (Tier-I), and Tier-II accounts.

However, those government employees with just a Tier-I NPS account are ineligible, though they can utilise this feature if they have a Tier-II account. 

New NPS subscribers will get access to the multiple fund manager option three months after registration. Through this initiative, PFRDA aims to provide NPS subscribers with a broader range of investment choices, which applies to all asset classes other than the alternate asset class (Scheme A). 

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