Selecting the Right NPS Fund Manager

Are you facing difficulty in finding the right Fund Manager for your NPS investments?

Choosing the right fund manager is always crucial for the growth and security of your assets. This blog explores frequently asked questions while selecting a fund manager tailored to your goals and risk appetite. From performance records to investment strategies, we will demystify the process, ensuring you entrust your investments to capable hands. Join us as we embark on a journey to find the ideal fund manager for navigating the complexities of the financial world with confidence.

Frequently Asked Questions:

1. Can a government employee choose a fund manager of their choice for NPS?

Yes, investors of the NPS now have the flexibility to choose a fund manager as per their flexibility. Previously, for government sector employees, there was a default plan wherein the PFRDA used to select the fund managers on their behalf. However, now they have the liberty to choose fund managers and investment schemes as per their preference. 

However, if an investor is a state government employee, they will need special permission from the state government to avail this flexibility. Once they have permission, they can select one out of the three PFMs of their choice and one investment scheme as per their financial goals. 

For more details, you can refer to the following podcast on Sound Cloud. 

2. How can you switch from one pension fund to another?

Any subscriber maintaining an activate NPS account can raise a request for online management of account via the Protean CRA website. Once registered, you can log in using your credentials. Next, choose a fund manager and investment scheme as per your convenience. 

You can also visit a Point of Presence (PoP) branch to opt for this facility by submitting a written application. You can choose any plan or even go back to the default plan as per your convenience. 

However, this facility can be availed only once a year. Therefore, before you proceed, the investment experts suggest having a clear-cut purpose for switching. 

Please note: When you pick a different pension fund manager for NPS that does not attract any extra exit load or taxation. It is a fundamental right extended to all Tier-1 and Tier-2 NPS account holders. 

To learn more about how to select NPS fund manager, consider listening to this simplified Hindi podcast posted by “NPS Ki Pathshala” on Soundcloud: https://on.soundcloud.com/rDFyVNLmpG1yo5K18. 

3. How can I transfer my NPS from one service provider to another?

The PFRDA has enabled all NPS subscribers to transfer their POP or POP-SP. However, the procedure cannot be directly executed for corporate employees as long as they are working in the same sector or the same organisation. Also, for any beneficiary, having two separate POPs or POP-SPs for their Tier-1 and Tier-2 accounts is not allowed. 

To raise the request you must submit the duly-filled UoS-S5 form at your existing Point of Presence branch. This form includes a field where you need to mention the details about your new POP/ POP-SP. 

After the request is granted you can continue to track the transactions involving your NPS account using the same PRAN. In case you wish to check the complete list of POP-SPs before opting for an Inter Sector Shift, then you can easily do so by visiting this link: https://www.npscra.nsdl.co.in/pop-sp.php. 

4. How do you select an NPS fund manager to reap maximum benefits?

At present, there are 3 NPS fund managers for government sector employees. For private sector staff, the selection pool is much bigger with 10 different options for the PFM. 

As per investment experts, the selection criteria should be well defined while finalising the fund manager. For instance, if you are aggressive-minded then it makes sense to select a fund manager whose equity fund allocations are consistently outperforming the others. Similarly, if you carry a bit conservative approach then try to stick to a fund manager who prioritises contributions towards government securities. 

Further, you may opt for more control over your investments by selecting the ‘active-choice’ that allows regulating the equity and debt exposures. The key lies in how much risk you are willing to take. 

Also, when it comes to choosing a pension fund manager you can always study the records to check the consistency of results. Thus, an annual review is recommended to decide whether a switch is needed or not. 

5. How to check a pension fund manager’s performance?

To determine which is the best pension fund manager for NPS, you must compare the rolling returns of the PFRDA-registered PFMs in your desired asset class. The new regulations allow any beneficiary to pick different fund managers for individual wealth creation schemes. 

For instance, you may pick the SBI Pension Funds for the corporate debt segment while selecting LIC for government bonds and HDFC for equity respectively. When you go through the various schemes such as Scheme A, C, G and E, you gather detailed knowledge about which program stands for which asset class. 

While checking the rolling returns, comparing the data of the last 5 years is considered sufficient. Generally, switching makes sense when the fund manager is underperforming for successive years. 

Also, you can check the official website of the NPS Trust where it publishes the performance of all the fund managers. All you need to do is move to the ‘Returns’ section to see the performance of fund managers and investment schemes. Accordingly, you can make the best decisions regarding your NPS investments.

For more information, you can refer to the podcast available on Sound Clouds: https://soundcloud.com/nps-ki-pathshala-podcast/102-how-to-check-pension-fund-managers-performance 

6. Which is better: NPS active or auto?

After you have figured out which one is the best NPS fund manager for a particular segment, now it is time to decide the amount of risk tolerance. Considering a subscriber identifies themselves as a low-risk taker, then going for the auto-choice NPS will be a great option. 

Contrarily, let’s say you are willing to take calculated risks. Then it is recommended to select the ‘active choice’ to ensure you reap the perfect risk-adjusted returns through thorough market analysis. 

In the former case, the fund manager automatically lowers your portfolio's equity exposure as you gradually approach retirement age. However, for active NPS subscribers, the asset mix is a lot more flexible where one may decide up to 75% of their contributions to go towards equity assets. Similarly, the allocation for alternative investment funds is capped at a maximum of 5%. So, within the allowed range you can adjust your contributions freely. 

Final Words

If you are looking for a dependable investment option to ensure a substantial corpus for your post-retirement days, you can consider opening an NPS account. It can help you be financially secure after you retire. You can click here to open your NPS Account now.

- Story by Kakoli Laha