PFRDA New NPS Scheme: On June 21, Deepak Mohanty, the chairman of the Pension Fund Regulatory and Development Authority (PFRDA), announced a new NPS balance lifecycle program. This new program aims to balance risks and returns and will be launched in July or August. All pension funds will offer this new NPS balance lifecycle scheme. This financial year, the PFRDA aims to add 1.1 million new private sector members to the National Pension System (NPS). For more details about the PFRDA’s new NPS scheme, read below.
What is PFRDA New NPS Scheme 2024
The Pension Fund Regulatory and Development Authority (PFRDA) is introducing a new National Pension System (NPS) balanced lifecycle scheme starting in July and ending in September 2024. This scheme will evenly split investments between 50% debt and 50% equity. The plan is designed to balance the risks and returns according to the investor’s age. Once an investor turns 45, the proportion of debt investments will increase. Existing NPS customers will have the option to switch to this new scheme.
Objective of PFRDA New NPS Scheme
The new NPS scheme by PFRDA aims to effectively manage risk and returns. According to a report by Moneycontrol, how your assets are allocated will depend on your age. If you are over 45 years old, a larger part of your investments will be in debt.
Best NPS investment options are available right now?
When you join the National Pension System (NPS), you have two investment options:
- Auto Choice
- Active Choice
Auto Choice
In Auto Choice, your money is automatically split between debt and equity based on your age. There are three types of Auto Choice funds:
- LC75 – Aggressive Life Cycle Fund: This fund invests about 75% of your money in stocks until you turn 35. After that, the equity portion decreases each year, and more money goes into debt. By age 55, your stock allocation will be down to 15%.
- LC50 – Moderate Life Cycle Fund: This is the default option in Auto Choice. It evenly splits your investments between debt and equity until you are 35. As you age, the equity portion decreases, leaving you with only 10% in stocks by age 55, with the rest in debt.
- LC25 – Conservative Life Cycle Fund: This fund starts with 25% of your money in stocks until you turn 35. The equity portion then gradually reduces, reaching just 5% by the time you are 55.
Active Choice
In Active Choice, you can decide how much of your money goes into debt and how much into equity. This option gives you more control over your investments.