New NPS scheme- Pension Fund Regulatory and Development Authority (PFRDA) Chairman Deepak Mohanty said that the new National Pension System (NPS) Balance Lifecycle Plan is going to be launched between July and August. Read full news…
India’s pension fund regulator plans to launch a balanced life cycle fund in the September quarter for people who want more equity allocation in their portfolio. According to media reports, this fund will be an additional option in the auto option. Where equity allocation can be up to a maximum of 50 percent. But tapering will start only after the age of 45. Let us tell you that earlier, allocation for equity funds starts from the age of 35. In this scheme, 50 percent of the investment will be allocated in debt and 50 percent in equity, in which adjustment will be done on the basis of age.
Life cycle funds are asset-allocation funds in which the share of each asset class is automatically adjusted to minimise risk as the desired retirement date approaches.
NPS Options
Currently, the National Pension System (NPS) offers two options to the subscribers to create a pension portfolio – first is active and the second is auto.
- In the active option, clients can decide the allocation between equity, corporate bonds and government securities.
- However, the Auto option comes with three options – Aggressive Fund (75 per cent equity allocation), Medium Fund (50 per cent equity allocation) and Conservative Fund (25 per cent equity allocation)
What is tapering?
According to the report, equity allocation across all options starts reducing once the subscriber turns 35. The auto option allows a maximum of 20 per cent in equity funds at age 50, which reduces to 15 per cent by age 55.
