Balanced Life Cycle Fund under NPS: PFRDA has launched a new investment fund called the Balanced Life Cycle Fund for NPS subscribers

New NPS investment option: Opportunity to earn higher returns from equity for these investors The new fund allows NPS subscribers to remain invested in equity for 45 years instead of the 35 years allowed in current life cycle funds. This will help equity investors earn higher equity returns


The Pension Fund Regulatory and Development Authority (PFRDA) has recently added a new fund to the National Pension System (NPS) called the 'Balanced Life Cycle Fund.' This new fund is open to private sector subscribers who have invested in NPS either through their employer's corporate model or by directly investing as individuals in the citizens' model.
#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
PFRDA made the announcement about the new lifecycle fund through a circular dated October 1, 2024.

Balanced Life Cycle Fund: Key details

The new life cycle fund will automatically rebalance the asset classes, i.e., equity (E), government securities (G), and corporate bonds (C), depending on the age and risk profile of the NPS subscriber.

Retirement planning in NPS: You can lose Rs 21 lakh in total monthly income if you buy an annuity plan worth Rs 50 lakh without comparison

GrowfastJava Programming with ChatGPT: Learn using Generative AI
Artificial Intelligence(AI)
Java Programming with ChatGPT: Learn using Generative AI
By - Metla Sudha Sekhar, Developer and Lead Instructor
Basics of Generative AI : Unveiling Tomorrow's Innovations
Artificial Intelligence(AI)
Basics of Generative AI : Unveiling Tomorrow's Innovations
By - Metla Sudha Sekhar, Developer and Lead Instructor
Generative AI for Dynamic Java Web Applications with ChatGPT
Artificial Intelligence(AI)
Generative AI for Dynamic Java Web Applications with ChatGPT
By - Metla Sudha Sekhar, Developer and Lead Instructor
Mastering C++ Fundamentals with Generative AI: A Hands-On
Artificial Intelligence(AI)
Mastering C++ Fundamentals with Generative AI: A Hands-On
By - Metla Sudha Sekhar, Developer and Lead Instructor
Master in Python Language Quickly Using the ChatGPT Open AI
Artificial Intelligence(AI)
Master in Python Language Quickly Using the ChatGPT Open AI
By - Metla Sudha Sekhar, Developer and Lead Instructor
Zero to Hero in Microsoft Excel: Complete Excel guide 2024
Office Productivity
Zero to Hero in Microsoft Excel: Complete Excel guide 2024
By - Metla Sudha Sekhar, Developer and Lead Instructor
Vastu Shastra Course
Astrology
Vastu Shastra Course
By - Sachenkumar Rai, Vastu Shashtri
SQL for Data Science along with Data Analytics and Data Visualization
Data Science
SQL for Data Science along with Data Analytics and Data Visualization
By - Metla Sudha Sekhar, Developer and Lead Instructor
A Comprehensive ASP.NET Core MVC 6 Project Guide for 2024
Web Development
A Comprehensive ASP.NET Core MVC 6 Project Guide for 2024
By - Metla Sudha Sekhar, Developer and Lead Instructor
Mastering Microsoft Office: Word, Excel, PowerPoint, and 365
Office Productivity
Mastering Microsoft Office: Word, Excel, PowerPoint, and 365
By - Metla Sudha Sekhar, Developer and Lead Instructor
Digital marketing - Wordpress Website Development
Marketing
Digital marketing - Wordpress Website Development
By - Shraddha Somani, Digital Marketing Trainer, Consultant, Strategiest and Subject Matter expert
Mastering Full Stack Development: From Frontend to Backend Excellence
Web Development
Mastering Full Stack Development: From Frontend to Backend Excellence
By - Metla Sudha Sekhar, Developer and Lead Instructor
Financial Literacy i.e Lets Crack the Billionaire Code
Finance
Financial Literacy i.e Lets Crack the Billionaire Code
By - CA Rahul Gupta, CA with 10+ years of domain experience, trainer
Business Storytelling Masterclass
Leadership
Business Storytelling Masterclass
By - Ameen Haque, Founder of Storywallahs
Future of Marketing & Branding Masterclass
Marketing
Future of Marketing & Branding Masterclass
By - Dr. David Aaker, Professor Emeritus at the Haas School of Business, UC Berkeley, Author | Speaker | Thought Leader | Branding Consultant
Human Potential and the Future of Employment
HR
Human Potential and the Future of Employment
By - Lynda Gratton, Prof. at London Business School, Speaker, Author, Global Thought Leader
ESG and Business Sustainability Strategy
Strategy
ESG and Business Sustainability Strategy
By - Vipul Arora, Partner, ESG & Climate Solutions at Sattva Consulting Author I Speaker I Thought Leader
Financial Reporting and Analytics
Finance
Financial Reporting and Analytics
By - Dr. C.P. Gupta, Professor: Department of Finance and Business Economics, University of Delhi
Balanced Life Cycle Fund (BLC)
Age
Asset Class - E
Asset Class -C
Asset Class - G
Upto 45 years
50%
30%
20%
46 years
48%
28%
24%
47 years
46%
26%
28%
48 years
44%
24%
32%
49 years
42%
22%
36%
50 years
40%
20%
40%
51 years
39%
18%
43%
52 years
38%
16%
46%
53 years
37%
14%
49%
54 years
36%
12%
52%
55 years and beyond
35%
10%
55%
Source: PFRDA circular

Current investment options under NPS

Currently, the NPS scheme allows an investor to choose between Active or Auto Choice.

Active choice under NPS

The Active Choice fund allows the NPS investor to invest the contribution amount per his/her preference. The active choice allows an NPS investor to have a maximum equity allocation of 75% till the age of 50 years. After that, equity allocation is reduced to 50% at the age of 60 years. The balance 25% can be invested in government securities, corporate bonds and alternative investment funds. However, contribution to alternative investment funds cannot exceed 5% of the contribution amount.

Auto choice under NPS

The auto choice option is also known as the Lifecycle fund. Under this fund, there are three investment options available to the NPS investors, namely - a) LC75 - Aggressive Life Cycle Fund, b) LC50 - Moderate Life Cycle Fund and c) LC25 - Conservative Life Cycle Fund.

Equity allocation under Auto choice in NPS

All three investment options enable a high equity allocation until the age of 35, after which it gradually decreases. For instance, LC75 allows a maximum equity allocation of 75% until age 35 and starts reducing every year the NPS subscriber reaches the age of 55. Similarly, LC-50 allows a maximum equity allocation of 50% until age 35 and starts reducing every year the NPS subscriber reaches the age of 55.

According to the PFRDA circular, “The maximum equity allocation under Balanced Life Cycle Fund shall be 50% which shall taper down after the age of 45 years as compared to 35 years under existing life cycle funds.”
The PFRDA circular has clarified that the existing choices under NPS, namely, Active and Auto choices, will remain unchanged. The Balanced Lifecycle Fund will be an additional investment option. The existing Moderate Life Cycle Fund (LC50) will continue to be the default choice, stated PFRDA.
#sr_widget.onDemand p, #stock_pro.onDemand p{font-size: 14px;line-height: 1.28;} .onDemand .live_stock{left:17px;padding:1px 3px 1px 5px;font-size:12px;font-weight:600;line-height:18px;top:9px} #sr_widget.onDemand .sr_desc{margin:0 auto 0;} #sr_widget.onDemand .sr_desc{color: #024d99;margin-top:10px;} #sr_widget.onDemand .crypto .live_stock .lb-icon{8px 6px 5px 3px !important} #sr_widget.crypto.onDemand a.text{border-bottom:1px solid #ccc;padding-bottom:5px;display:block;width:100%} #sr_widget.onDemand .sr_desc .text p, #stock_pro.onDemand .sr_desc .text p{font-size:12px;font-weight:400;}
This story originally appeared on: India Times - Author:Faqs of Insurances