PFRDA has issued a circular for NPS subscribers, stating that now investors can choose up to three pension fund managers for different asset classes.
There is good news for investors of the popular retirement scheme NPS (National Pension System). Pension regulator PFRDA (pension fund regulatiry and development authority) has issued a circular for NPS subscribers, stating that now investors can choose up to three pension fund managers for different asset classes.
NPS can invest in different assets
NPS subscribers can invest in different asset classes under this investment, which include- Equity (E), Government Bond (G), Corporate Bond (C) and Alternate Asset Class (A).
What are the new rules?
Till now NPS subscribers did not have the facility to choose multiple fund managers. Once the subscriber chose a pension fund manager, the money invested in different asset classes of NPS was managed by that fund manager. That is, one fund manager used to manage each asset, but now subscribers can choose different fund managers for each asset class.
These conditions have to be remembered
PFRDA has also put some conditions along with the new facility. Such as-
1. To use this facility, subscribers will have to opt for active choice for asset allocation and not auto mode.
2. This facility will not be available in alternate asset classes, only in equity, government security and corporate bond assets.
3. This facility will be available only in the existing All Citizen Model (Tier-I), NPS corporate model (Tier-I) and Tier-II (All subscribers) categories. That is, government employees having Tier-1 NPS account cannot avail this facility, they will get the benefit only if they have Tier-2 account.
4. New investors joining the scheme will be able to avail the facility of choosing multiple pension fund managers only after three months of registration.
How will it be beneficial?
For example, suppose you have chosen HDFC Pension Fund as the fund manager for your NPS investment and you invest in equity and bonds, then the same fund will be managing both your funds. But now you will be able to choose a different fund manager for equities and a different fund manager for bonds. The benefit of this will be that you will be able to choose a better fund manager according to your assets.
Facility to withdraw money in installments is available
PFRDA (Pension Fund Regulatory and Development Authority) had recently issued a circular, in which it was said that the subscribers will get the systematic lump sum withdrawal facility in a phased manner. Now subscribers can choose to withdraw 60 per cent of their pension corpus monthly, quarterly, half-yearly or annually till the age of 75 years.
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