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What is NPS?

National Pension System (NPS) is a voluntary, defined contribution retirement savings scheme designed to enable the subscribers to make optimum decisions regarding their future through systematic savings during their working life. NPS seeks to inculcate the habit of saving for retirement amongst the citizens.

Best NPS Fund Managers

36-year-old Arpit was pleasantly surprised when he read about the benefits of investing in National Pension System (NPS). Arpit understood that investment in NPS could help him create a sizable retirement corpus and earn an old-age pension. In addition, investments in the NPS can also help him claim a tax deduction of up to Rs. 2 lakh and reduce his taxable income considerably.

NPS Fund Performance: Scheme G

The average NPS fund has delivered an annualized return of 10.2% over the last 8 years when investing in government securities. To put this return in perspective, let us compare it with the NIFTY 10 Year Benchmark G-Sec Index, which is typically used as a benchmark by Gilt mutual funds.

The comparison shows that NPS funds have outperformed the NIFTY 10 Year Benchmark G-Sec Index by a decent margin. While the NPS funds have delivered annualized returns of over 10%, the NIFTY 10 Year Benchmark G-Sec Index has delivered 7.5% annualized returns over the previous 8 years.


NPS Fund Performance: Scheme C

In the last 8 years, the performance of corporate debt funds across different pension fund managers has been remarkably similar to government bonds.

From a benchmarking perspective, the average NPS fund has delivered a little higher returns when compared to the S&P BSE Corporate Bond Index.

NPS Fund Performance: Scheme E

When it comes to equities, all pension fund managers seem to move as a unified group. If you look at the annualized returns of the last 8 years, returns from most funds are around the average of 14.5%, with only HDFC and LIC a bit further off.

From a benchmarking standpoint, since different funds might be following a different index, let’s use the NIFTY 50 TRI and the NIFTY 200 TRI index as our reference points.

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