PFRDA Circular on allowing option to allocate 75% of subscriber’s contribution in Asset Class E (Equity) in Tier-I and 100% in Asset Class E (Equity) in Tier-II under active choice without any conditions of tapering from the age of 51 years.
PENSION FUND REGULATORY AND DEVELOPMENT AUTHORITY
PFRDA/2022/31/REG-PF/04
Date: 20th October, 2022
CIRCULAR
To
Subscribers under NPS-All Citizen Model and NPS-Tier-II,
SUBJECT:
(i) Allowing option to allocate 75% of subscriber’s contribution in Asset Class E (Equity) in Tier-I under active choice without any conditions of tapering from the age of 51 years under NPS Private Sector, and
(ii) allowing option to allocate 100% of subscriber’s contribution in Asset Class E (Equity) in Tier-II (optional account) under active choice without any conditions of tapering from the age of 51 years -reg.
Reference is invited to the Circular No. PFRDN2018/03/PF/03 dated 22nd May, 2018 issued by the Authority .
2. Under NPS-All Citizen Model, subscribers have the option to select any one of the registered Pension Funds and actively allocate their contributions across 04 Asset Classes, i.e. Equity (E), Corporate Bonds (C), Government Securities (G) and Alternate Assets (A) with ‘Active Choice’ as below:
| Asset Class | Max limit |
| Asset Class G (Government Securities) | 100% |
| Asset Class C (Corporate Bonds) | 100% |
| Asset Class E (Equity) | 75% |
| Asset Class A (Alternate Assets) | 5% |
However, the limit of 75% on asset class E gets tapered off @ 2.5% every year and is re-allocated to Government securities when subscriber attains 51 years of age. The age-wise maximum equity limit is based on the following matrix:
| Age | 50 | 51 | 52 | 53 | 54 | 55 | 56 | 57 | 58 | 59 | 60 & above |
| Max Equity | 75 | 72.5 | 70 | 67.5 | 65 | 62.5 | 60 | 57.5 | 55 | 52.5 | 50 |
3. In partial modification to the above-mentioned circular, it has been decided by the Authority to allow option to allocate 75% of subscriber’s contribution in Asset Class E (Equity) in Tier-I under active choice without any conditions of tapering from the age of 51 years.
4. Further, it has been decided to allow option to allocate 100% of subscriber ‘s contribution in Asset Class E (Equity) in Tier-II (optional account) under active choice without any conditions of tapering.
The Asset class wise exposure limits that will now be applicable to private sector subscribers under Tier I and to all subscribers in Tier II are tabulated below:
| Tier -I | |
| Asset Class | Max limit |
| Asset Class G (Government Securities) | 100% |
| Asset Class C (Corporate Bonds) | 100% |
| Asset Class E (Equity) | 75% |
| Asset Class A (Alternate Assets) | 5% |
| Tier-II | |
| Asset Class | Max limit |
| Asset Class G (Government Securities) | 100% |
| Asset Class C (Corporate Bonds) | 100% |
| Asset Class E (Equity) | 100% |
| Asset Class A (Alternate Assets) | 5% |
5. Pension Funds have prepared risk profiling of the respective schemes under different asset classes to disclose the level of inherent risks involved. Before choosing the investment scheme/asset class, subscribers are advised to independently evaluate the performance of asset class and the risks involved and choose the investment option according to the risk profile of the Scheme. The risk profiling of the schemes is available on the websites of respective Pension Funds and website of NPS Trust.
6. Subject to the above revision, all other terms and conditions as contained in the aforementioned circular shall remain unchanged.
7. This circular is issued in exercise of powers of the Authority under sub-clause (b) of sub-section (2) of Section 14 read with Section 23 of the PFRDA Act , 2013 and sub-regulation (1) of Regulation 14 of PFRDA (Pension Fund) Regulations, 2015 as amended from time to time.
8. The revision shall be effective from the date of this circular.
Yours sincerely,
(A.K. Soni)
Executive Director
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