National Pension System (NPS) subscribers will now be able to change asset allocation four times a year. This will enable those subscribers who have chosen active asset allocation choice to tweak their portfolio and bring them in line with changing market condition and with their risk appetite.
The latest change of enabling NPS subscribers to change their portfolio four times a year is already live. Prior to this, subscribers could make changes in their asset allocation twice in a year.
PFRDA Chairman Supratim Bandyopadhyay said the four changes have now been permitted in response to requests from subscribers.
He, however, cautioned that subscribers would do well to always remember that NPS, is aimed for the long term and this newly-introduced flexibility of four change should be used in a prudent manner.
Not for auto choice subscribers
It is important to note that this change will not affect the pension fund subscribers who have chosen auto choice of asset allocation. In the auto choice, the portfolio gets rebalanced based on the subscriber’s age and the variant of auto choice chosen. There are three options within auto choice: aggressive, moderate and conservative.
In aggressive variant, the maximum allocation to equity is capped at 75 percent (up to 35 years). It reduces to 50 percent in moderate option, and falls further to 25 percent in the conservative option.
Under active choice, on the other hand, subscribers can decide the allocation to different asset classes based on their personal preference and risk appetite. However, the maximum allocation to equity — even under active choice — is capped at 75 percent (up to 50 years of age).
There are four broad categories of asset classes out of which subscribers have to comprise their portfolio: equity, corporate debt, government bonds and alternative investment funds.
There are several other initiatives that have yet to be launched. For instance, PFRDA plans to allow 100 percent investment in equity under Tier -II accounts.
Also, the pension fund regulator is set to offer a wider choice to subscribers with three new pension fund managers already getting in-principle approval. These fund managers are Axis Pension Fund, Max Life and Tata.
In another news – National Pension System recently enabled subscribers to connect with the NPS Trust via a WhatsApp number.