New National Pension System rules: Good news for Government subscribers! Now get these options
National Pension System: Here's good news for government subscribers of National Pension System (NPS).
National Pension System: Here's good news for government subscribers of National Pension System (NPS). The Pension Fund Regulatory and Development Authority (PFRDA) has decided to introduce new options for Central Government Subscribers with regard to the choice of Pension Funds and Investment Pattern in Tier-I of National Pension System (NPS). The new options were announced in a circular dated May 8, 2019. Here are all you need to know about the new options:
Pension fund choice
About the choice of the pension fund, the PFRDA circular said the Government subscribers can now choose any of the pension funds just like the private sector subscribers. The Government subscribers can now even pick Private sector funds.
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The current provision of the combination of the Public Sector Pension Funds will, however, continue to be available as a default option for the new as well as existing Government subscribers.
Fund option change - Once a year
The Government subscribers can now change their Fund option once in a year.
Choice of investment pattern
Government employees can now get the following investment choices:
- Default option: Existing scheme in which funds are allocated by the PFRDA among the three Public Sector Undertaking fund managers based on their past performance in accordance with the PFRDA guidelines.
- Safest option: Government employees who prefer a fixed return with a minimum amount of risk will get the option to invest 100% of the funds in Government securities (Scheme G).
- Higher returns option: The government employees seeking higher returns will the option of Life Cycle based schemes:
a. Conservative Life Cycle Fund with maximum exposure to equity capped at 25% - LC-25, the circular said.
b. Moderate Life Cycle Fund with maximum exposure to equity capped at 50^ - LC-50.
The circular said that the change in Pension Funds or investment pattern is presently allowed in respect of incremental flows only. In the due course of time, the circular said, the PFRDA will draw up a scheme "to allow the transfer of accumulated corpus as per the new choices of the Government subscribers in a reasonable time frame of say five years. "
The changes announced in the circular are applicable w.e.f. 1st April 2019.