Introduced in January 2004, the National Pension Scheme (NPS) originally served as a government-sponsored retirement plan exclusively for government employees. However, in 2009, it was expanded to encompass all other sectors.
The NPS is governed jointly by the government and the Pension Fund Regulatory and Development Authority (PFRDA) and is designed as a long-term, voluntary investment program tailored for retirement.
Also Read: Retire With Confidence: Expert Advice On Making NPS Your Retirement Game-Changer
The NPS assures a pension, with the potential for substantial investment gains even if it doesn’t promise a fixed pension amount. The primary objective of the program is to encourage employees to make consistent contributions to their pension accounts during their working years.
Upon retirement, a subscriber has the option to withdraw a portion of their accumulated corpus, while the remaining amount is disbursed as a monthly income. This strategy provides a steady stream of income after retirement.
The NPS is divided into two tiers: Tier one accounts and Tier two accounts. Individuals who choose a Tier One account can withdraw cash only after they retire, but Tier Two accounts allow for early withdrawals.
Under Section 80 CCD of the Income Tax Act, investing in the NPS provides tax advantages of up to Rs 1.5 lakh. Withdrawing 60 per cent of the NPS corpus makes it tax-free. This makes it an appealing option for retirement planning since it provides the possibility of a lump sum payoff.
Below is a breakdown of the performance of the private sector NPS’s various funds (stock funds, government bond funds, and corporate bond funds).
National Pension Scheme (NPS): Tier I Account
Aditya Birla Sun Life Pension
Equity Fund:
14.46% (Returns in 1 year)
21.43% (Returns in 3 years)
12.52% (Returns in 5 years)
Government bond fund:
8.60% (Returns in 1 year)
5.29% (Returns in 3 years)
9.23% (Returns in 5 years)
Corporate debt fund:
7.59% (Returns in 1 year)
5.78% (Returns in 3 years)
8.80% (Returns in 5 years)
HDFC Pension Fund
Equity Fund:
13.63% (Returns in 1 year)
22.45% (Returns in 3 years)
13.47% (Returns in 5 years)
Government bond fund:
8.47% (Returns in 1 year)
4.99% (Returns in 3 years)
9.25% (Returns in 5 years)
Corporate debt fund:
7.60% (Returns in 1 year)
6.19% (Returns in 3 years)
9.06% (Returns in 5 years)
ICICI Prudential Pension Fund
Equity Fund:
15.35% (Returns in 1 year)
23.60% (Returns in 3 years)
13.35% (Returns in 5 years)
Government bond fund:
8.39% (Returns in 1 year)
5.00% (Returns in 3 years)
9.01% (Returns in 5 years)
Corporate debt fund:
7.67% (Returns in 1 year)
5.88% (Returns in 3 years)
8.57% (Returns in 5 years)
Kotak Pension Fund
Equity Fund:
15.18% (Returns in 1 year)
23.09% (Returns in 3 years)
13.71% (Returns in 5 years)
Government bond fund:
8.42% (Returns in 1 year)
5.15% (Returns in 3 years)
9.21% (Returns in 5 years)
Corporate debt fund:
7.36% (Returns in 1 year)
5.64% (Returns in 3 years)
7.96% (Returns in 5 years)
LIC Pension Fund:
Equity Fund:
14.41% (Returns in 1 year)
23.88% (Returns in 3 years)
12.65% (Returns in 5 years)
Government bond fund:
8.35% (Returns in 1 year)
5.18% (Returns in 3 years)
9.74% (Returns in 5 years)
Corporate debt fund:
7.26% (Returns in 1 year)
5.62% (Returns in 3 years)
8.75% (Returns in 5 years)
SBI Pension Fund
Equity fund:
13.48% (Returns in 1 year)
22.04% (Returns in 3 years)
12.43% (Returns in 5 years)
Government bond fund:
8.60% (Returns in 1 year)
5.00% (Returns in 3 years)
9.10% (Returns in 5 years)
Corporate debt fund:
7.38% (Returns in 1 year)
5.78% (Returns in 3 years)
8.65% (Returns in 5 years)
UTI Retirement Solutions:
Equity fund:
14.01% (Returns in 1 year)
22.29% (Returns in 3 years)
12.63% (Returns in 5 years)
Government bond fund:
8.57% (Returns in 1 year)
5.01% (Returns in 3 years)
8.95% (Returns in 5 years)
Corporate debt fund:
7.52% (Returns in 1 year)
5.47% (Returns in 3 years)
8.35% (Returns in 5 years)
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