Outlook Money
The Pension Fund Regulatory Development Authority plans to launch a new balanced life cycle fund, which will start tapering equity exposure after the subscriber reaches 45, extended by 10 more years.
In the existing life cycle fund, the tapering of equity exposure starts at 35 in the Auto-choice mode. It continues to reduce until age 55.
In active choice, the maximum equity allocation is 75 per cent up to 50 years; after that, it tapers down. At 60 and above, a subscriber can allocate up to 50 per cent in equity in active choice.
NPS offers three life cycle funds based on the subscribers' risk tolerance.
It allocates up to 75 per cent in equity, the highest percentage, until 35; at 45 years, it reduces to 35 per cent; and at 55 and above, it is 15 per cent.
In this plan, the maximum equity allocation up to 35 years is 50 per cent; at 45, it is 30 per cent; and at 55 and above, it is 10 per cent.
This plan allows a maximum equity exposure of 25 per cent up to 35 years of age, 15 per cent at 45, and 5 per cent at 55 and above.
Compiled By Himani Verma