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Best NPS Fund Managers: Which NPS Fund Should You Invest In?

The National Pension Scheme (NPS) is a long-term retirement plan available to employees in the private, public and unorganised sectors. You can choose among 10 NPS pension fund managers in India according to your investment terms, financial goals and risk tolerance level.
 

The National Pension Scheme (NPS) is a voluntary, long-term retirement plan administered and regulated by the Pension Fund Regulatory and Development Authority (PFRDA) under the Central Government of India.
 

Individuals in the private and public sectors can partake in this scheme by investing in low-risk equity funds, security funds or alternative investments with good returns. On maturity, they can withdraw a certain lump sum percentage on retirement, and the rest is received as a monthly pension.
 

However, you may be wondering which pension fund manager in NPS is best for you. 
 

Not to worry, we have compiled a list of the best NPS fund managers in India and presented their performance over the years to help you select the right pension fund manager for your portfolio. 

Best NPS Fund Managers In India

There are a total of 10 fund managers to choose from when you are investing in the National Pension Scheme (NPS). 
 

The best NPS pension fund managers for government and non-government sectors in India are:
 

For Both Government and Non-Government Sectors:

  • SBI Pension Funds Pvt. Ltd. 

  • UTI Retirement Solutions Ltd. 

  • LIC Pension Fund Ltd. 
     

For Non-Government Sectors:

  • Aditya Birla Sun Life Pension Management Ltd. 

  • Axis Pension Fund Management Ltd. 

  • HDFC Pension Management Co. Ltd. 

  • Max Life Pension Fund Management Ltd. 

  • Kotak Mahindra Pension Fund Ltd. 

  • Tata Pension Management Ltd. 

  • ICICI Prudential Pension Fund Management Co. Ltd.

Best Pension Fund Manager for NPS: Central Government Scheme 2023

Pension Fund Managers

SBI Pension Fund

UTI Retirement Solutions

LIC Pension Fund

Net Asset Value (NAV)

(As of 05/09/2023)

41.04

39.70

39.96

Returns*

1-Year

8.40%

8.30%

8.40%

3-Year

7.20%

7.40%

7.60%

5-Year

9.30%

9.20%

9.30%


Best NPS Fund Managers: Performance for Tier 1 Schemes 2023

Scheme -Tier

Scheme A - Tier I

Scheme E - Tier I

Scheme C - Tier I

Scheme G - Tier I

Years 

1 -Yr

3 -Yr

5 -Yr

1 -Yr

3 -Yr

5 -Yr

1 -Yr

3 -Yr

5 -Yr

1 -Yr

3 -Yr

5 -Yr

SBI PF

-0.50%

6.40%

9.00%

14.20%

21.10%

11.70%

6.80%

5.60%

8.60%

7.90%

4.70%

9.10%

LIC PF

5.40%

7.00%

7.80%

14.00%

23.00%

12.00%

6.60%

5.50%

8.70%

7.80%

4.90%

9.80%

UTI RSL

1.70%

5.60%

5.80%

13.80%

22.00%

11.90%

6.90%

5.30%

8.20%

8.10%

4.70%

9.00%

ICICI PF

0.30%

6.20%

7.00%

15.00%

22.70%

12.60%

7.10%

5.70%

8.50%

7.60%

4.70%

9.00%

Kotak PF

-0.70%

4.40%

7.40%

15.70%

22.60%

13.00%

6.60%

5.40%

7.70%

7.60%

4.80%

9.20%

HDFC PF

3.80%

7.90%

8.80%

13.40%

21.70%

NA

6.90%

6.00%

8.90%

7.70%

4.70%

8.80%

Birla PF

2.00%

5.90%

5.80%

14.20%

20.50%

11.80%

6.80%

5.60%

8.70%

7.90%

5.00%

9.20%

Tata PF

7.30%

NA

NA

13.60%

NA

NA

6.10%

NA

NA

8.60%

NA

NA

Max Life PF

-8.50%

NA

NA

9.30%

NA

NA

6.60%

NA

NA

8.70%

NA

NA

Axis PF

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA


Some returns under Tier 1 schemes of Tata Pension Fund, Max Life Pension Fund and Axis Pension Fund are unavailable as they were launched in August 2022, September 2022 and October 2022, respectively.
 

Disclaimer: These scheme return rates were taken on 06/09/2023 at 2:30 p.m. from the Money Control official portal. 
 

Investments in NPS are subject to market risk, and past performance of the mentioned Schemes/Pension Funds does not indicate future performance. We do not guarantee or assure any returns. Changes in Government policies and tax benefits may impact future returns.

Pension Fund Managers for NPS with Highest Tier 1 Equity Fund Returns (Scheme E)

Term

Best Returns

Pension Fund Manager

1-year

15.70%

Kotak Pension Fund - Scheme E - Tier I

3-year

23.00%

LIC Pension Fund - Scheme E - Tier I

5-year

13.00%

Kotak Pension Fund - Scheme E - Tier I

Best NPS Fund Managers: Performance for Tier 2 Schemes 2023

Scheme -Tier

Scheme A - Tier II

Scheme E - Tier II

Scheme C - Tier II

Scheme G - Tier II

Years 

NAV

1 -Yr

3 -Yr

5 -Yr

1 -Yr

3 -Yr

5 -Yr

1 -Yr

3 -Yr

5 -Yr

SBI PF

10.00

14.30%

21.30%

11.80%

6.60%

5.20%

8.10%

7.90%

4.70%

8.90%

LIC PF

10.00

13.40%

23.00%

12.10%

6.60%

6.60%

9.00%

7.80%

4.90%

10.00%

UTI RSL

10.00

13.70%

22.20%

11.90%

6.70%

5.30%

8.20%

8.00%

4.70%

9.00%

ICICI PF

10.00

15.50%

22.80%

12.80%

7.10%

5.70%

8.40%

7.70%

4.80%

9.00%

Kotak PF

10.00

15.80%

22.40%

12.90%

6.50%

5.20%

8.10%

7.50%

4.80%

8.90%

HDFC PF

10.00

13.40%

21.70%

12.60%

6.80%

5.80%

8.70%

7.60%

4.60%

9.50%

Birla PF

10.00

14.20%

20.70%

11.90%

NA

NA

NA

7.80%

5.00%

9.20%

Tata PF

NA

14.10%

NA

NA

6.90%

NA

NA

8.90%

NA

NA

Max Life PF

NA

16.20%

NA

NA

6.30%

NA

NA

6.70%

NA

NA

Axis PF

NA

NA

NA

NA

NA

NA

NA

NA

NA

NA


Some returns under Tier 2 schemes of Tata Pension Fund, Max Life Pension Fund and Axis Pension Fund are unavailable as they were launched in August 2022, September 2022 and October 2022, respectively.
 

Disclaimer: These scheme return rates were taken on 06/09/2023 at 2:30 p.m. from the Money Control official portal. 
 

Investments in NPS are subject to market risk, and past performance of the mentioned Schemes/Pension Funds does not indicate future performance. We do not guarantee or assure any returns. Changes in Government policies and tax benefits may impact future returns.

Pension Fund Managers for NPS with Highest Tier 2 Equity Fund Returns (Scheme E)

Term

Best Returns

Pension Fund Manager

1-year

15.80%

Kotak Pension Fund - Scheme E - Tier 2

3-year

21.70%

HDFC Pension Management Company Limited - Scheme E - Tier 2

5-year

12.90%

Kotak Pension Fund - Scheme E - Tier 2

How to Choose The Best Pension Fund Manager for NPS?

While the NPS scheme allows investors to have different fund managers for their Tier 1 and Tier 2 accounts, they can not have different fund managers for different schemes in the same tier.
 

For example, you cannot have an SBI Pension Fund for government securities, an ICICI Fund for equities, and a Max Life Fund for corporate debt. 
 

If you choose the ICICI Pension Fund - your equity, corporate debt, government securities, and alternative investment funds should all be from ICICI. The same rule applies to other funds as well. 
 

Hence, when selecting a pension fund manager in NPS, you must look at how the pension fund manager performs on a portfolio basis rather than looking at it from an asset basis.

Choosing NPS Fund Managers Based on Your Investor Profile

Investors can be divided into four main types based on how they allocate their funds:

  • An Aggressive Investor.

  • A Moderate Investor.

  • A Conservative Investor.

  • A Super-Safe Investor.
     

Based on their profile, here is their asset allocation is split among equities, corporate bonds, and government bonds:

Parameters

Types of Asset Class

Investor Type

Equity (E)

Corporate Bonds (C)

Government Bonds (G)

Aggressive

75%

10%

15%

Moderate

50%

25%

25%

Conservative

25%

20%

55%

Super Safe

5%

15%

80%


Regardless of what profile you fall under, you should note that NPS interest rates are market-linked. Your interest or return from NPS investments will depend on your contributions and asset allocation. 
 

The historical returns from NPS have been in the range of 12% to 15%. However, it depends on the scheme type. As of September 2023, the current NPS interest rate ranges from 9.00%* to 12.00%* p.a., depending on the type of scheme and investor.
 

Unlike most tax savings schemes, NPS does not offer fixed returns, its returns are market-linked. Also, since the scheme and investment amount vary, the interest rate in NPS has not been set as a definite amount.
 

Overall, it is hard to determine an outright best NPS Fund Manager since all pension fund managers carefully operate around an average.

What NPS Account Type Should You Choose?

When opening an NPS account, you get two investment options: Active Choice and Auto Choice.
 

  • Active Choice: For investors who wish to decide their asset mix. In other words, you can choose how your money is invested across available assets, subject to maximum allocation limitations. 
     

Active Choice

Active Investment Class

Equity (E)

Corporate (C)

Government (G)

Permissible Allocation

Up to 75%

Up to 100%

Up to 100%

Investment Risk

High


Medium

Low 

Investment Return (Potential)

 

  • Auto Choice: For passive investors who want an automatic allocation to decide how their money is spread across available asset classes. 
     

    Under this choice, the fund allocation is done on a life-cycle-based approach. It starts with an equity-heavy portfolio that gradually reduces equity allocations as you approach retirement. This optimises returns and cushions you from market volatility. 
     

You can choose among three life cycle choices under auto choice NPS investments: 
 

  • Moderate Life Cycle Fund: The default option that caps maximum equity exposure to 50%.

  • Aggressive Life Cycle Fund: This takes an aggressive investment approach where maximum equity allocation can go up to 75%.

  • Conservative Life Cycle Fund: The maximum equity allocation is capped at 25%.
     

Here is a table illustrating these points on how your funds will be allocated depending on your age:

Auto Choice

Parameters

Moderate Life Cycle Fund

Aggressive Life Cycle Fund

Conservative Life Cycle Fund

Asset class in (%)

Asset class in (%)

Asset class in (%)

Age

E

C

G

E

C

G

E

C

G

Up to 35 years

50

30

20

75

10

15

25

45

30

40 years

40

25

35

55

15

30

20

35

45

45 years

30

20

50

35

20

45

15

25

60

50 years

20

15

65

20

20

60

10

15

75

55 years

10

10

80

15

10

75

5

5

90

NPS Auto or Active, Which Is Better?

If you are new to investing and can not decide, we recommend going with the default auto choice, as it has a powerful effect on your NPS investments. 
 

Once you start tracking how your funds get allocated in NPS and their performance, you will gain enough experience to manage the allocation on your own and opt for an active choice. 
 

The NPS scheme allows you to change your fund manager once a year and your investment scheme four times a year. In other words, you can switch from active to auto or vice versa four times a year. 
 

This shift is allowed for investments in NPS Tier 1 (non-government subscribers only) and NPS Tier 2 accounts.

What are Pension Fund Managers in NPS?

Pension fund managers in NPS are similar to mutual fund managers. They invest and maintain the pension funds received from various investors into the 4 asset classes. They also regularly review investments to see if they are performing effectively. 
 

NPS fund managers are paid a fee in exchange for their services - which is determined by the average number of assets they manage. Here are an NPS fund manager's basic duties:
 

  • They pool money from investors and invest in various asset classes to generate maximum returns at suitable risks.

  • They must invest the received pool of funds according to the Investment Policy and PFRDA Regulations.

  • They must regularly evaluate the performance of investments to ensure they are generating optimal returns.

Factors to Consider When Picking the Best NPS Fund Manager

 

  • Risk Tolerance: Your investor profile will largely dictate your fund allocation strategy. Thus, knowing how much risk you can handle can help you select a fund manager that will closely meet your expected risk-reward preference. 

  • Past Performance: Checking the NPS fund manager's historical performance over the last few years can help in the decision-making process. You can also select different NPS fund managers for your Tier 1 and Tier 2 accounts. 

  • Investment Horizon: This is the length of time you hold your investment portfolio. Since NPS is generally a long-term investment plan, how close you are to retirement will dictate your fixed income ratio vs. equity. Based on this, you can pick your preferred fund manager.

  • Investment Goals: NPS is specially designed for retirement planning. Hence, your chosen pension fund manager must align with your investment goals. You can analyse the consistency of returns, Sharpe ratio, rolling returns, and other components the fund manager manages.  

  •  

Conclusion 

When choosing your NPS fund manager, it is essential to consider your financial goals, risk tolerance level, what type of NPS account (active or auto choice) you want to open, and your chosen NPS fund manager's past performance. 
 

You must also consider how they have performed on a portfolio basis rather than solely focusing on specific asset classes. 
 

Moreover, if you are a new investor, going for an auto-choice NPS account is recommended, as these offer optimal returns while still cushioning you from market volatility. As you gain more experience, an active choice account, where you pick your asset mix, may be better suited. 
 

The NPS is considered one of the best retirement plans in India. Hence, before choosing an NPS fund manager, ensure you implement the stated measures in this blog to ensure you get the highest returns.

Peaceful Retirement Awaits: Discover Your Perfect Pension Plan

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Tata AIA Life Insurance

A joint venture between Tata Sons Pvt. Ltd. and AIA Group Ltd. (AIA),  Tata AIA Life Insurance  is one of the leading life insurance providers in India. We post everything you need to know about life insurance, tax savings and a variety of lateral topics such as savings and investments in this space. You can access and read a host of different blogs, articles and pages at the Tata AIA Life Insurance Knowledge Center or get in touch with us with any queries or questions!

View all posts by Tata AIA Life Insurance

Frequently Asked Questions (FAQs)

What is an NPS Scheme?

The National Pension Scheme (NPS) is a voluntary retirement investment plan employees in public, private and unorganised sectors can subscribe to. 

It is used to build a retirement corpus where 60% of the total amount can be withdrawn as a lump sum at 60 years. The other 40% will go into an annuity plan to provide a regular income on retirement.

Purchasing an annuity is mandatory unless your total corpus does not exceed ₹5 lakh.

Who can open an NPS account?

Any individual citizen of India - resident and non-resident (NRI), aged between 18 - 70 years is eligible to open an NPS account. 

Can I change my NPS fund manager?

You can change your pension fund manager in NPS once in a financial year. However, a change in the fund manager denotes a change in the fund. 

Ensure you check their past performance and long-term return record using our tables provided above before selecting/changing NPS fund managers.

What is the minimum contribution amount for NPS?

When opening an NPS account, you must make an initial minimum payment of ₹100 for a Tier 1 account and ₹1,000 to open a Tier 2 account. The minimum amounts to maintain your accounts are:

Tier 1:

  • Minimum amount per contribution: ₹500

  • Total minimum contribution per Financial Year: ₹1,000

  • Minimum number of contributions per Financial Year: 1

Tier 2:

  • Minimum amount per contribution: ₹250

  • No minimum balance is required.

Is NPS better than MF?

Both offer tax benefits, but the NPS programs provide a larger tax deduction of up to ₹1.5 lakh under Sec 80C and an additional ₹50,000 deduction over and above the the ₹1.5 lakh deduction under Subsection 80CCD (1B). 

The advantage of NPS is that 60% of the lump sum withdrawal on maturity is tax-free. However, the income from the annuity is taxed under Section 80CCD(3) according to tax bracket rates. 

Mutual funds often offer larger returns than NPS. Hence, the trade-off here is between returns and tax benefits. The bigger the income opportunities, the lesser the potential tax benefits.

Should I open a Tier 1 and Tier 2 NPS account?

Everyone registering for an NPS account will have a Tier 1 account by default, having restricted withdrawals. NPS Tier 2 accounts can be opened voluntarily, allowing withdrawal anytime. You should note that only Tier 1 accounts are eligible for tax benefits.

Can I invest 100% of my NPS into an annuity?

Yes, you can invest anywhere between 40% and 100% of your corpus in annuity. The higher the amount you invest in an annuity, the higher your pension. 

However, you should note that the income from the annuity is taxed under Section 80CCD(3), while the lump sum maturity withdrawal at age 60 is tax-exempt.

Can I stop paying NPS?

If you fail to pay or stop paying the minimum contribution amount in a year, your NPS will account freeze. To unfreeze the account, you must pay the minimum required amount and a penalty of ₹100. 

If you want to exit the scheme before reaching 60 years, you can withdraw only 20% of the accumulated corpus. You must use the remaining 80% of the corpus to buy an annuity.

 

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  • Insurance cover is available under the product.

  • The products are underwritten by Tata AIA Life Insurance Company Ltd.

  • The plans are not a guaranteed issuance plan, and it will be subject to Company’s underwriting and acceptance.

  • For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale.

  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

  • Please know the associated risks and the applicable charges, from your Insurance agent or the Intermediary or policy document issued by the insurance company.

  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication, however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.

  •  Tax: *Income Tax benefits would be available as per the prevailing income tax laws, subject to fulfilment of conditions stipulated therein. Income Tax laws are subject to change from time to time. Tata AIA Life Insurance Company Ltd. does not assume responsibility on tax implications mentioned anywhere in this document. Please consult your own tax consultant to know the tax benefits available to you.

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  • #Riders are not mandatory and are available for a nominal extra cost. For more details on the benefits, premiums and exclusions under the riders please refer to the Rider Brochure or contact our Insurance Advisor or visit our nearest branch office.

  • Bonus: 2These bonuses are not guaranteed in nature. The Company may declare Cash Bonus rate annually in advance. The Cash Bonuses if declared, will be applicable provided all due premiums have been paid.

  • ULIP:

    • IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS BORNE BY THE POLICYHOLDER

    • THE LINKED INSURANCE PRODUCT DO NOT OFFER ANY LIQUIDITY DURING THE FIRST FIVE YEARS OF THE CONTRACT. THE POLICY HOLDER WILL NOT BE ABLE TO SURRENDER/WITHDRAW THE MONIES INVESTED IN LINKED INSURANCE PRODUCTS COMPLETELY OR PARTIALLY TILL THE END OF THE FIFTH YEAR.

    • Past performance is not indicative of future performance.

    • All investments made by the Company are subject to market risks. The Company does not guarantee any assured returns. The investment income and price may go down as well as up depending on several factors influencing the market.

    • Please make your own independent decision after consulting your financial or other professional advisor.

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