For long-term wealth creators, the National Pension System (NPS) just unveiled a game-changing option! Non-government subscribers aged 18 and above can now allocate up to 100% of their funds to equities within a single NPS scheme, effective October 1. This significant update allows investors seeking aggressive growth to maximize their exposure to the stock market, marking a substantial jump from the previous maximum equity allocation of 75%.
This exciting development comes under the new Multiple Schemes Framework (MSF), empowering pension fund managers to design tailored schemes that push the boundaries of equity exposure. For instance, new offerings from prominent fund houses like the SBI PF NPS Jeevan Swarna Retirement Yojana and Tata Pension Fund NPS Smart Retirement Fund are geared towards investing a substantial portion, even up to 100%, in equities, with a small allocation to alternative assets. This expanded choice offers greater potential for capital appreciation, especially for those with a long investment horizon and a higher risk appetite.
However, this highly aggressive 100% equity allocation isn't universally available. It's crucial to note that NPS Vatsalya subscribers (those under 18) and government employees are currently not eligible for these new, high-equity schemes. The primary reason for excluding NPS Vatsalya lies in its unique withdrawal rules and structure; funds cannot be withdrawn before the subscriber turns 18, and there is no provision for premature exit akin to regular NPS. Furthermore, the new MSF schemes typically come with a 15-year vesting period and are specifically designed for adult investors, creating a regulatory mismatch with the child-centric NPS Vatsalya framework. While equities are often a preferred asset class for younger investors due to their longer time horizon to navigate market volatility, the current rules of NPS Vatsalya restrict this specific high-equity option for children's portfolios.
