In order to provide flexibility to NPS subscribers, PFRDA has allowed them to modify their investment choice and asset allocation twice a financial year. This has come into effect from April 1, 2017.
Currently, NPS subscribers can change their investment choice and asset allocation once a financial year. While investment choice refers to automatic and active, asset allocation includes exposure to various asset classes such as equity, debt and AIFs.
Active choice refers to an option where the subscriber decides the asset allocation on his own.
On the other hand, in auto option, the choice of asset allocation depends on the age of the subscriber. So typically, exposure in risky assets like equity decreases with increase in age.
In a circular, PFRDA has said, “The subscribers will have the choice of change of the investment option (active or auto choice) as well as asset allocation ratio (allocation among asset class- equity/corporate bonds/government securities/ alternate investment) two times in a financial year. this scheme preference will be applicable to the existing pension corpus as well as to the prospective subscriptions.”
However, subscribers can only change pension fund manager once a year, clarified PFRDA.
Seven pension fund managers manage over Rs.1.50 lakh crore under NPS as on December 2016.
