A scorecard of NPS schemes

As the NPS All Citizen Model marks its 15th year, we analyse how the various schemes have fared

It has been 15 years since the National Pension System (All Citizen Model) was launched, back in May 2009. Since then, NPS schemes have become a crucial part of retirement planning for Indian citizens.

And the stock market hitting record highs several times in the past yearhas boosted the return performance of the equity option (Scheme E) under the NPS. With over 11 pension funds in the NPS, the latest entrants being Axis, Max Life, and DSP in the last two years, they collectively manage assets worth around ₹1.7 lakh crore in Tier 1 schemes, with equity, government bonds (Scheme G), and corporate bonds (Scheme C) constituting 45 per cent, 34.9 per cent, and 19.8 per cent, respectively, as of April 26. Let’s dive deeper into how each Tier 1 scheme has performed.

ACTIVE INVESTING

The return analysis of Scheme E Tier I funds reveals a consistent trend of outperformance compared to other asset classes, attributable to the buoyant Indian markets. Over five-year period, Scheme E exhibited returns surpassing other asset classes by twofold, while the outperformance of Scheme E ranged at 500 to 553 basis points (bps) over a 10-year horizon, with an average return of 14.3 per cent. This can encourage subscribers looking for active investing under the NPS to consider Scheme E over others, despite its long-term investment nature and limited withdrawal options.

However, despite Scheme E’s reasonable returns, it falls short when compared to relevant mutual fund category funds, particularly large-cap direct plans, by 300, 40, and 120 bps over one,