Government Clears Expansion of Pension Investment Options for Central Employees

Under the National Pension System (NPS) and the Unified Pension Scheme (UPS), the government has approved the expansion of two investment options, Life Cycle and Balanced Life Cycle, for central government employees. The Finance Ministry announced this on Friday. This decision follows persistent demands from central government employees for a wide range of investment options similar to those available to non-government contributors.

The Finance Ministry stated that these options have been designed to enhance flexibility in retirement planning and allow employees to manage their retirement funds according to personal preferences.

Under the NPS and UPS, central government employees can now choose from a variety of investment options. Under the default option, a "default pattern" of investment is established as defined by the Pension Fund Regulatory and Development Authority (PFRDA) from time to time. The second option is Scheme G, in which 100% investment will be made in government securities for low-risk, assured returns.

Under the Life Cycle (LC-25) option, the maximum equity allocation will be 25%, which gradually decreases from age 35 to age 55. In the LC-50 option, the maximum equity allocation is limited to 50% of the retirement corpus.

The Balanced Life Cycle (BLC) option is a modified version of the LC50. In this, the equity allocation decreases from age 45. This allows employees to remain invested in equities for a longer period if they wish. In the LC75 option, the maximum equity allocation is 75%, which gradually decreases from age 35 to age 55.