InvestorQ : What is the % wise asset allocation in Equity, corporate, and Government classes for NPS-1 tier schemes?
Mary Joseph made post

What is the % wise asset allocation in Equity, corporate, and Government classes for NPS-1 tier schemes?

Answer
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1 month ago


The NPS (National pension system)  offers subscribers two ways to invest in it – a default auto choice for subscribers who find it tough to decide and an active choice for subscribers who wish to take control of their investments. The NPS auto choice (default) option works well for passive investors and those who seek to let an automatic allocation decide the proportion of money spread across the available asset classes. Under this type of investment choice, the investments will be made in a life-cycle fund. Here, the fraction of funds invested across three asset classes will be determined by a pre-defined portfolio. 

There are three asset classes (Equity, Corporate debt, Government Bonds) from which the allocation is to be specified –

Asset class E - Equity and related instruments
Asset class C - Corporate debt and related instruments
Asset class G - Government Bonds and related instruments

At the lowest age of entry (18 years), the auto choice will entail an investment of 50% of pension wealth in E Class, 30% in C Class, and 20% in G Class. These ratios of investment will remain fixed for all contributions until the participant reaches the age of 36. From age 36 onwards, the weight in E and C asset class will decrease annually and the weight in G class will increase annually till it reaches 10% in E, 10% in C, and 80% in G class at age 55.