NPS equity flows hit record high in H1 2026: Active choice vs auto choice explained

Insurance and NPS made record equity purchases worth Rs 88,852 crore in the first half of the financial year 2026. Insurance invested Rs 45,929 crore, and NPS invested Rs 42,922 crore, according to the data.

2025 vs 2026

Total investments in H1 2025 were Rs 69,900 crore and Rs 74,413 crore in H2 2025. Investment rose to Rs 88,852 crore in H1 2026.

Why are investments in insurance and NPS rising?

The investments in insurance and NPS have been rising. This is due to the following reasons:

• Insurance premiums are received consistently.
• NPS receives regular monthly contributions.
• This represents long-term, contractual capital.
• It does not depend on market timing.
• Investments increase at better valuations during market corrections.
• Household savings are shifting from bank deposits and gold toward market-linked products.
• The share of ULIPs and market-linked pension plans is growing.

Changes made to the NPS recently

Now, an equity allocation of up to 75 per cent is permitted under the Active Choice and Multiple Scheme Framework (MSF), which became effective as of October 2025. Option for up to 100 per cent equity exposure for eligible non-government subscribers.

NPS active choice vs NPS auto choice

In active choice, subscribers get full control over how their NPS corpus is invested. They can decide allocations across equity, corporate bonds, government securities, and alternative investment funds, where applicable. On the other hand, in auto choice, pension funds adjust the mix of equity and debt funds by their own. It is done on the basis of various parameters like age and risk appetite, among others.

For example, if a 28-year-old individual wants to invest in NPS active choice and believes equities will outperform over the long term, he may choose 75 per cent equity, 15 per cent corporate debt, and 10 per cent government securities. In this, a long time is required to see the growth in the portfolio. It will also show market fluctuations, but for a short period.

Who should choose what

If you are a first-time investor, then an auto choice is better for you. This is good for the investors who want to reduce the risk of investment over a period of time, want to forget investments, and don't have time to review them for a long time.

Active choice is better for investors who understand market risk and want to invest for a long time.

What is NPS?

It is a government-backed scheme started to provide retirement income to all Indian citizens. The scheme is managed by the Pension Fund Regulatory and Development Authority (PFRDA). In NPS, you can invest in a pension account throughout your employment.

Types of NPS accounts

Pension account (Tier-I): There are some restrictions on withdrawal.
Voluntary savings account (Tier-II): Under this, you can withdraw money easily.

Investments in NPS are subject to market risks. Zee Business suggests its readers consult with their investment advisers before making any financial decision.