NPS Tier I and II Fund Managers Face Scrutiny over One-Year Returns

NPS Trust Data Reveals Mixed Returns Across Asset Classes

The latest data from the NPS Trust shows that returns on the National Pension System Tier I and Tier II schemes for a one-year tenure have been mixed across asset classes. According to the data, equity funds have delivered up to 74.67 percent, while corporate bonds have yielded 45.59 percent and government bonds up to 41.15 percent.

The NPS data on Tier I and Tier II schemes, as of April 21, indicate that equity-oriented schemes have continued to reflect market movements amid volatility. However, corporate bond funds have offered relatively steadier returns across the one-year tenure, followed by government pension funds. 10 pension fund managers under the NPS manage subscriber investments across equity, corporate, and government bonds.

We examined the one-year returns of NPS Tier I and Tier II schemes in the E, C, and G categories. Both Tier I and Tier II operate much like a mutual fund, but returns differ across schemes and pension fund managers. While subscribers must have a Tier I account, Tier II is suitable mainly for disciplined investors seeking a low-cost, flexible allocation, long-term investment option alongside their retirement savings.

Read also: FirstClub Secures $55 Million in Funding from Peak XV, Sofina, and Other Investors 9 Months After $22 Million Series A Round

Notably, the NPS Tier II scheme allows subscribers to invest voluntarily in market-linked instruments with complete flexibility and no lock-in. Unlike the retirement-focused Tier I account, Tier II permits withdrawals at any time without penalty.

The NPS returns on both tiers indicate that corporate bond schemes have delivered consistent gains for investors, generating returns in the range of 12 percent to nearly 46 percent for a one-year tenure. Equity returns have largely remained volatile, with all funds delivering positive returns.

In the corporate schemes, SBI, ICICI, and UTI were ahead, suitable for investors with a low risk appetite. Under the G scheme, SBI, ICICI, and Kotak posted relatively positive gains compared to their peers.

Read also: RBI Policy Preview: A Cautionary Wait Ahead