Big update on pension of government employees! Now you will get 2 new powerful options in NPS to earn more than stock market.

If you are a central government employee and invest in the National Pension System (NPS) for your pension, then there is a big and wonderful news for you. Pension regulator PFRDA has introduced two new and exciting investment options to make your retirement planning better.

Till now, government employees had limited and mostly safe investment options, but now you will be able to invest more aggressively as per your risk appetite and age, which can give you much higher returns in the long run. Let us understand it in simple language.

What are these 2 new and powerful options?

In addition to the already existing 4 options, PFRDA has added two new ‘auto-choice’ options:

1. Auto Choice – Life Cycle 75 (High Risk, High Return)
This option is especially designed for young employees who want to make more money by taking more risks.

• What is special: Under this, 75% of your total NPS contribution till the age of 35 will be invested directly in equity i.e. stock market.
• How it will work: After the age of 35, your investment in the stock market will gradually reduce and by the age of 55 it will come down to 15%.
• Who should choose: This is a great option for employees who are young and want to build huge wealth over a long period of time without being afraid of market fluctuations.

2. Auto Choice – Life Cycle – Aggressive (Growth to middle age)
This option is for employees who are in the middle of their career, but still want growth in their portfolio.

• What is special: Under this, 50% of your contribution till the age of 45 years will be invested in the stock market.
• How it will work: After 45 years it will gradually reduce and will come down to 35% by the age of 55 years.
• Who should choose: It is good for employees who want to grow their money faster even in mid-career with balanced risk.

What were the options before?

Till now government employees had these 4 options:

1. Default Plan: In this, money is invested according to a fixed formula.
2. Active Choice (100% Government Security): In this, the entire money goes into government bonds (safest, lowest returns).
3. Auto Choice – Life Cycle 25 (Low Risk): 25% of money in stock market till the age of 35.
4. Auto Choice – Life Cycle 50 (Medium Risk): 50% of money in stock market by age 35.

Do this before taking any decision

PFRDA has advised that before choosing any new option, you must check the past performance of different pension funds. You can easily see information related to returns of all funds on the website of NPS Trust. This new step will further empower government employees to take better financial decisions for their future.