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They have the shortest lock in period of 3 years in which they gave more than 25% returns in the past
The National Pension Scheme (NPS) is one of India’s most accepted pension-oriented products. The Central Government introduced the programme as part of a social security initiative for all Indian citizens. The NPS scheme allows individuals employed in public and private sectors to invest in low-risk equity funds, security funds, or alternative investments with good returns. We have covered the following in this article:
Investing in NPS will give you an edge over fixed-income schemes and allow you to avail tax benefits up to Rs 2 lakh under Section 80C and Section 80CCD of the Income Tax Act, 1961, depending on the type of account, i.e. Tier-I or Tier-II. While the lock-in period on NPS schemes is until retirement, you can choose to withdraw your funds prematurely in specific cases to cater to unforeseen financial requirements.
The pension programme also benefits you from choosing the allocation of your investments. The scheme gives you the option to select the funds automatically or manually. While the active choice will allow you to determine the plan and percentage of your funds you wish to invest in, the auto choice will allocate your investments based on the risk assessment and your profile.
At present, there are eight pension fund managers in the country.
SBI Pension Fund, LIC Pension Fund, and UTI Retirement Solutions are the only fund managers who manage pension contributions of government employees under NPS.
| Pension Fund Managers | SBI Pension Fund | UTI Retirement Solutions | LIC Pension Fund | |
|---|---|---|---|---|
| Net Asset Value (NAV) (As of 31st Dec 2021) | 37.2135 | 36.0889 | 36.2794 | |
| Returns* | 1-year | 6.40% | 6.81% | 7.20% |
| 3-year | 10.42% | 10.47% | 10.49% | |
| 5-year | 8.92% | 9.05% | 8.98% | |
As of the 31st Dec 2021, UTI Retirement Solutions generated the best returns of 9.05% in the past five years under the NPS Central Government Scheme. The fund mainly invests in the banking finance sector, government sector, and financial institutions. The next in line is recorded by the
LIC Pension Fund with the returns generated recorded at 8.98% for the same period. SBI Pension Fund also recorded the returns at 8.92% in the last five years.
| Pension Fund Managers | SBI Pension Fund | LIC Pension Fund | UTI Retirement Solutions | |
|---|---|---|---|---|
| Net Asset Value (NAV) (As of 31st Dec 2021) | 31.9520 | 32.2714 | 32.1044 | |
| Returns* | 1-year | 6.29% | 7.02% | 6.74% |
| 3-year | 10.43% | 10.37% | 10.46% | |
| 5-year | 8.84% | 8.85% | 8.95% | |
UTI Retirement Solutions generated the highest returns of 8.95% under the NPS state government scheme in the last five years. The fund’s portfolio is predominantly exposed to the financial sector (banking and housing credit institutions). LIC Pension Fund followed it by generating 8.85% returns over the last five years.
| Pension Fund Managers | Returns* | ||
|---|---|---|---|
| 1-year | 3-year | 5-year | |
| HDFC Pension Fund | 25.92% | 17.97% | 17.14% |
| UTI Retirement Solutions | 25.54% | 16.15% | 15.88% |
| SBI Pension Fund | 24.15% | 15.98% | 15.39% |
| ICICI Pru. Pension Fund | 26.34% | 17.49% | 16.11% |
| Kotak Mahindra Pension Fund | 27.25% | 17.85% | 16.52% |
| LIC Pension Fund | 27.78% | 15.96% | 14.79% |
| Term | Best Returns | Pension Fund Manager |
| 1-year | 27.78% | LIC Pension Fund Ltd. – Scheme E – TIER I |
| 3-year | 17.97% | HDFC Pension Fund – Scheme E – TIER I |
| 5-year | 17.14% | HDFC Pension Fund – Scheme E – TIER I |
| Pension Fund Managers | Returns* | ||
|---|---|---|---|
| 1-year | 3-year | 5-year | |
| HDFC Pension Fund | 25.76% | 17.90% | 17.09% |
| UTI Retirement Solutions | 26.26% | 16.50% | 16.20% |
| SBI Pension Fund | 24.08% | 16.06% | 15.47% |
| ICICI Pension Fund | 26.29% | 17.58% | 16.21% |
| Kotak Mahindra Pension Fund | 27.15% | 17.59% | 16.38% |
| LIC Pension Fund | 27.78% | 15.84% | 14.52% |
| Term | Best Returns | Pension Fund Manager |
| 1-year | 27.78% | LIC Pension Fund Ltd. – Scheme E – TIER II |
| 3-year | 17.90% | HDFC Pension Fund – Scheme E – TIER II |
| 5-year | 17.09% | HDFC Pension Fund – Scheme E – TIER II |
Calculate monthly pension & tax benefits through ClearTax NPS Calculator. Utilise the pension calculator to know the lump sum amount and the provisional pension you can expect on maturity or at the time of retirement based on your monthly instalments. All you have to do is key in the basic parameters of your scheme. The automated tool will calculate the tentative pension and the total corpus you can expect at the end of the tenure.
Most investors choose to invest in the NPS only to save on taxes. However, with the contribution to the NPS having been mandated for state and central government employees, many consumers have opted for the pension programme, unaware of the tax implications and benefit NPS offers. Hence, it is advised to ensure that you understand the rules regarding the withdrawal of funds and mandatory clauses involved in the product before you begin investing.
