Pension Funds
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About
Functions
Roles & Responsibilities
PF Charges
Schemes
Investment Choices
Public Disclosures
List of Pension Funds

About

A Pension Fund is an intermediary granted a certificate of registration under Section 27(3) by the Authority. It is responsible for receiving contributions, accumulating them, and making payments to subscribers as specified by regulations.

Pension Funds manage pension corpus through various schemes under the National

Pension System (NPS) or other pension schemes regulated by the Authority. They use access codes to confirm receipt of netted assets and instructions regarding fund allocation. Additionally, they confirm fund allocation and regularly communicate the Net Asset Value (NAV) of each scheme to the Central Recordkeeping Agency (CRA) and the custodian.

The Pension Fund Regulatory and Development Authority (PFRDA) Regulations, 2015 were notified on May 14, 2015, and have been subsequently amended.

Functions

The functions of Pension Funds include, but are not limited to, the following:

  1. Day-to-Day Management: Overseeing the daily management of pension schemes on behalf of the National Pension System (NPS) Trust.
  2. High Standards of Fund Management: Providing high-quality fund management services, exercising care, prudence, professional skill, promptness, diligence, and vigilance in the best interests of subscribers, and avoiding speculative investments or transactions.
  3. Coordination with Intermediaries: Coordinating activities with other intermediaries and permitted entities, entering into agreements, and utilizing technological platforms to fulfill functional obligations.
  4. Record Maintenance: Maintaining books of accounts, records, registers, and documents related to investment decisions and pension scheme operations to ensure compliance with regulations, guidelines, circulars, and other instructions issued by the Authority, and facilitating an audit trail of transactions to ensure business continuity.
  5. Confidentiality and Information Protection: Ensuring the confidentiality of subscribers' information and activities related to the pension fund, protecting all information within its control, and sharing such information with the Authority, NPS Trust, or other intermediaries as required by law.

For more details, please refer to the Pension Fund Regulatory and Development Authority (PFRDA) Regulations, 2015 and subsequent amendments.

Roles & Responsibilities

Pension Funds are responsible for receiving contributions and managing the pension corpus through various schemes under the National Pension System (NPS). This is done in accordance with the provisions of the PFRDA Act, rules and regulations, agreements with the National Pension System Trust, and investment guidelines issued by the Authority.

Pension Funds must adhere to the PFRDA Act 2013, PFRDA (Pension Fund) Regulations, and PFRDA (National Pension System Trust) Regulations 2015. The management of pension schemes is carried out in line with the scheme's objectives, the Act, Trust Deed, rules, regulations, guidelines, and circulars issued by the Authority, within specified timelines.

Pension Funds are expected to maintain high standards of fund management, exercising care, prudence, professional skill, promptness, diligence, and vigilance in the best interests of subscribers. Speculative investments or transactions are to be avoided.
Securities are held on behalf of, and in the name of, the NPS Trust. The Trust is the registered owner of these securities and funds, while individual subscribers under NPS remain the beneficial owners of these assets and funds.
 

PF Charges

The Authority has revised the existing Investment Management Fee (IMF) for Pension Funds.Effective from 1st April 2021, the following IMF shall be charged by the newly appointed Pension Funds:
 

Slabs of AUM Managed by the Pension Fund Maximum Investment Management Fee (IMF)
Up to ₹10,000 Cr. 0.09%*
₹10,001 – ₹50,000 Cr. 0.06%
₹50,001 – ₹1,50,000 Cr. 0.05%
Above ₹1,50,000 Cr. 0.03%

*UTI Pension Fund Limited charges a fee of 0.07% under this slab.

The IMF charged by the Pension Fund on the slab structure is based on the aggregate Assets Under Management (AUM) of the Pension Fund across all schemes managed by the Pension Funds.
These IMF rates will be reviewed by the Authority every five years from the date of implementation.  

Schemes

National Pension System (NPS) Schemes Managed by Pension Funds

A. Government Sector (Central Govt / State Govt including Central Autonomous Bodies and State Autonomous Bodies)
As per PFRDA’s investment guidelines, the following exposure limits are set for the Government sector, including CABs/SABs under NPS:

  • Government Securities & related investments: Up to 65%
  • Debt Instruments & related investments: Up to 45%
  • Short term debt instruments & related investments: Up to 10%
  • Equity & related investments: Up to 15%
  • Asset backed, trust structured & Miscellaneous investments: Up to 5%

Three public sector Pension Funds (LIC Pension Fund Limited, SBI Pension Funds Private Limited, UTI Pension Fund Limited) manage and invest contributions as decided by the Authority.

Further, based on the Government’s OM no. 1/3/2016-PR dated 31st January 2019 and as per the Authority’s recent circular dated 8th May 2019; Government employees (Central Government only) have been given the following options:
1. Choice of Pension Fund: Government subscribers can choose any one of the pension funds, including private sector pension funds, and change their option once a year. The combination of public sector pension funds remains the default option.
2. Choice of Investment Pattern:

  • Default scheme: Funds allocated by PFRDA among three Public Sector Undertaking fund managers.
  • Scheme G: 100% investment in Government securities for fixed returns with minimum risk.
  • LC-25: Conservative life cycle fund with up to 25% equity exposure.
  • LC-50: Moderate life cycle fund with up to 50% equity exposure.

The Central Government subscribers under NPS may exercise one of the above choices of investment pattern twice in a financial year.
For more details, please PFRDA circular no PFRDA/2019/12/REG_PF/1 dated 08th May, 2019
Some of the State Governments have also extended above choice of investments.
B. NPS-Lite
Fresh enrollments under NPS-Lite have been discontinued since 01.04.2015. For existing subscribers, the following exposure limits apply:

  • Government Securities & related investments: Up to 65%
  • Debt Instruments & related investments: Up to 45%
  • Short term debt instruments & related investments: Up to 10%
  • Equity & related investments: Up to 15%
  • Asset backed, trust structured & Miscellaneous investments: Up to 5%

Three public sector Pension Funds (LIC Pension Fund Limited, SBI Pension Funds Private Limited, UTI Retirement Solutions Limited) manage contributions. Kotak Mahindra Pension Fund Limited is chosen by one aggregator for managing contributions. Under NPS- Lite scheme, no selection of Pension Fund or the asset allocation is offered to the subscribers.
C. Atal Pension Yojana (APY)
APY is a government pension scheme for unorganised sector workers, offering a guaranteed minimum pension of Rs. 1,000 to Rs. 5,000 per month at age 60, based on contributions.
The asset allocation for APY is the same as for Government sector employees under NPS:

  • Government Securities & related investments: Up to 65%
  • Debt Instruments & related investments: Up to 45%
  • Short term debt instruments & related investments: Up to 10%
  • Equity & related investments: Up to 15%
  • Asset backed, trust structured & Miscellaneous investments: Up to 5%

Three public sector Pension Funds (LIC Pension Fund Limited, SBI Pension Funds Private Limited, UTI Pension Fund Limited) manage contributions.
D. All Citizen Un-Organised Sector
Subscribers can choose between “Active Choice” or “Auto Choice” investment patterns. The following exposure limits apply:

  • Equity & related investments: Up to 75%
  • Debt Instruments & related investments: Up to 100%
  • Government Securities & related investments: Up to 100%
  • Short term investments: Up to 10%

Subscribers can change their Pension Fund once a financial year and their Investment Option four times a financial year.
E. Corporate Sector
For corporate sector subscribers where the employer has adopted NPS for its employees, investment options and choices are flexible. There are two types of schemes under this segment:
Corporate CG Scheme
This scheme has been discontinued for new corporate subscribers but continues for those already covered under it. The exposure limits are:

  • Government Securities & related investments: Up to 65%
  • Debt Instruments & related investments: Up to 45%
  • Short term debt instruments & related investments: Up to 10%
  • Equity & related investments: Up to 15%
  • Asset backed, trust structured & Miscellaneous investments: Up to 5%

Investments are managed by LIC Pension Fund Limited or SBI Pension Funds Private Limited.
Other Scheme (Currently available under corporate segment)
Employers may delegate the selection of Pension Fund and/or investment mode to employees or select on their behalf. The investment options include:

  • Asset class E: Equity and related instruments
  • Asset class C: Corporate debt and related instruments
  • Asset class G: Government Bonds and related instruments
  • Asset Class A: Alternative Investment Funds (CMBS, MBS, REITS, AIFs, etc.)

Subscribers can choose between “Active Choice” or “Auto Choice” investment patterns. The exposure limits are:

  • Equity & related investments: Up to 75%
  • Debt Instruments & related investments: Up to 100%
  • Government Securities & related investments: Up to 100%
  • Short term investments: Up to 10%

Subscribers can change their Pension Fund once a financial year and their Investment Option twice a financial year.
F. Tier II Tax Saver Scheme (TTS)
Available only for Central Government NPS subscribers, with a 3-year lock-in period for tax benefits under section 80C of the Income Tax Act. No withdrawals are allowed during the lock-in period, except in case of the subscriber's death. Contributions to NPS-TTS are not allowed until the lock-in period is completed if the Tier-I account is closed.
Investment limits for TTS are:

  • Equity: 10% - 25%
  • Debt: Up to 90%
  • Cash/Money Market/Liquid mutual funds: Up to 10%

Subscribers do not have investment choices under this scheme but can have up to 3 pension funds, with changes allowed only after the lock-in period.
G. NPS Tier-II Composite
Available for NPS subscribers from the Central Government, State Government, Central Autonomous Bodies, and State Autonomous Bodies.
As per the Master Circular no. PFRDA/MASTERCIRCULAR/2023/01/PF-01 dated 18th August 2023, the exposure limits are:

  • Government Securities & related investments: Up to 65%
  • Debt Instruments & related investments: Up to 45%
  • Short term debt instruments & related investments: Up to 10%
  • Equity & related investments: Up to 15%
  • Asset backed, trust structured & Miscellaneous investments: Up to 5%

Investment Choices

Active Choice
Subscribers under the National Pension System (NPS) can choose between Active Choice and Auto Choice for their investments.
What is Active Choice?
In Active Choice, subscribers have the flexibility to allocate their investments across various asset classes, adhering to the investment caps set by the Pension Fund Regulatory and Development Authority (PFRDA). Subscribers can decide how their contributions are invested based on personal preferences. They must select the Pension Fund, Asset Class, and the percentage allocation for each asset class within a scheme.
Asset Classes in Active Choice
Subscribers can allocate investments among four asset classes:

  • Equity (E): Equity and related instruments
  • Corporate Debt (C): Corporate debt and related instruments
  • Government Bonds (G): Government bonds and related instruments
  • Alternative Investment Funds (AIF): Including CMBS, MBS, REITS, AIFs, InvITs, etc.

Under active choice, a subscriber can select single or multiple asset class under a single Pension Fund with a specific cap as mentioned below:

  • Equity (E): Up to 75%
  • Corporate Bonds (C): Up to 100%
  • Government Securities (G): Up to 100%
  • Alternative Investment Funds (AIF): Up to 5%

The total allocation across all asset classes (E, C, G, and A) cannot exceed 100%.
Auto Choice
For subscribers who prefer not to manage their investments, NPS offers Auto Choice. This option invests contributions in a life-cycle fund, where the allocation across asset classes changes with the subscriber's age.
Types of Auto Choice Funds

  1. LC75 - Aggressive Life Cycle Fund: Up to 75% in Equity, reducing with age.
  2. LC50 - Moderate Life Cycle Fund: Up to 50% in Equity, reducing with age.
  3. LC25 - Conservative Life Cycle Fund: Up to 25% in Equity, reducing with age.

Asset Allocation in Auto Choice

Age

LC75 (Aggressive)

LC50 (Moderate)

LC25 (Conservative)

Up to 35 Years

E: 75%, C: 10%, G: 15%

E: 50%, C: 30%, G: 20%

E: 25%, C: 45%, G: 30%

36 Years

E: 71%, C: 11%, G: 18%

E: 48%, C: 29%, G: 23%

E: 24%, C: 43%, G: 33%

37 Years

E: 67%, C: 12%, G: 21%

E: 46%, C: 28%, G: 26%

E: 23%, C: 41%, G: 36%

38 Years

E: 63%, C: 13%, G: 24%

E: 44%, C: 27%, G: 29%

E: 22%, C: 39%, G: 39%

39 Years

E: 59%, C: 14%, G: 27%

E: 42%, C: 26%, G: 32%

E: 21%, C: 37%, G: 42%

40 Years

E: 55%, C: 15%, G: 30%

E: 40%, C: 25%, G: 35%

E: 20%, C: 35%, G: 45%

41 Years

E: 51%, C: 16%, G: 33%

E: 38%, C: 24%, G: 38%

E: 19%, C: 33%, G: 48%

42 Years

E: 47%, C: 17%, G: 36%

E: 36%, C: 23%, G: 41%

E: 18%, C: 31%, G: 51%

43 Years

E: 43%, C: 18%, G: 39%

E: 34%, C: 22%, G: 44%

E: 17%, C: 29%, G: 54%

44 Years

E: 39%, C: 19%, G: 42%

E: 32%, C: 21%, G: 47%

E: 16%, C: 27%, G: 57%

45 Years

E: 35%, C: 20%, G: 45%

E: 30%, C: 20%, G: 50%

E: 15%, C: 25%, G: 60%

46 Years

E: 32%, C: 20%, G: 48%

E: 28%, C: 19%, G: 53%

E: 14%, C: 23%, G: 63%

47 Years

E: 29%, C: 20%, G: 51%

E: 26%, C: 18%, G: 56%

E: 13%, C: 21%, G: 66%

48 Years

E: 26%, C: 20%, G: 54%

E: 24%, C: 17%, G: 59%

E: 12%, C: 19%, G: 69%

49 Years

E: 23%, C: 20%, G: 57%

E: 22%, C: 16%, G: 62%

E: 11%, C: 17%, G: 72%

50 Years

E: 20%, C: 20%, G: 60%

E: 20%, C: 15%, G: 65%

E: 10%, C: 15%, G: 75%

51 Years

E: 19%, C: 18%, G: 63%

E: 18%, C: 14%, G: 68%

E: 9%, C: 13%, G: 78%

52 Years

E: 18%, C: 16%, G: 66%

E: 16%, C: 13%, G: 71%

E: 8%, C: 11%, G: 81%

53 Years

E: 17%, C: 14%, G: 69%

E: 14%, C: 12%, G: 74%

E: 7%, C: 9%, G: 84%

54 Years

E: 16%, C: 12%, G: 72%

E: 12%, C: 11%, G: 77%

E: 6%, C: 7%, G: 87%

55 Years

E: 15%, C: 10%, G: 75%

E: 10%, C: 10%, G: 80%

E: 5%, C: 5%, G: 90%

The total allocation across all asset classes (E, C, G, and A) cannot exceed 100%.

List of Pension Funds

A. Pension Funds (PFs) for ‘Default Scheme’ under Government Sector:

B. Pension Funds (PFs) for Government (other than ‘Default Scheme’) and Private Sector:

For more details, please refer to the specific guidelines and circulars issued by the Pension Fund Regulatory and Development Authority (PFRDA).

Quick Links
NPS Trust Regulations Circulars Guidelines