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Pension regulator PFRDA has introduced the Balanced Life Cycle Fund (BLC), another life cycle fund option for private sector (All Citizen model and Corporate NPS) subscribers.
This new life cycle fund —launched on Tuesday on the occasion of Pension Diwas —focuses on growth assets, particularly equity investments, providing more flexibility and potential for higher returns for NPS subscribers.
The big benefit is ease of choice through automatic rebalancing of asset classes. Also More equity exposure is available during the working years, leading to a substantial retirement corpus over the long term.
The tapering of equity allocation under BLC is similar to existing LC 50 where the equity is capped at 50 pe rcent but the equity tapering starts at the age of 45 instead of 35.
Under BLC, Equity allocation up to 50 percent is maintained until the age of 45. The Reduction in equity allocation starts from the age of 45,instead of 35 and at age 55, equity allocation remains at 35 percent, sources explained.
Fastest growing segment
Private sector (non-government sector) is currently the fastest growing segment in the NPS ecosystem with assets under management of about ₹2.6 lakh crore as of mid-September. Non-government sector has seen frenetic growth in last four years with assets under management growth of 25 percent between March 2020 and March 2024. On a year-on-year basis, Private sector NPS has grown 40 percent as of September 15.
With the latest PFRDA move to introduce Balanced Life Cycle Fund, there are four life cycle funds for subscribers to choose. These are Conservative( LC-25 with equity allocation up to 25 per cent ); Moderate (LC-50); Aggressive (LC-75) and now BLC.
Life cycle (LC) funds are asset allocation funds available under the ‘Auto Choice’ investment option of NPS, where the allocation of assets changes each year depending upon the risk profile/age of the subscriber.
These funds are widely adopted by the private sector subscribers under NPS.
About 65 per cent of the private sector subscribers have chosen Life Cycle Funds amongst various investment choices.
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