The pension fund manager collects NPS contributions from subscribers and invests them across asset classes like equity, corporate bonds, and government securities.
Auto and Active investment choices are the two ways of asset allocation in the NPS scheme.
- Auto Choice: In this option, asset allocation is set automatically based on NPS subscriber’s age and risk appetite (Aggressive, moderate, or conservative).
- Active Choice: NPS subscribers can set exposure to different asset classes under several conditions:
- Maximum allocation to equity asset class cannot exceed 75%.
- Maximum exposure to corporate bonds and government bonds is 100%.
- Maximum allocation to alternative asset like REIT (Real Estate Investment Trusts), InvIT (Infrastructure Investment Trusts), AIF (Alternative Investment Funds), and mortgage-backed securities is 5%.
