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| Article Name : | | | PERFORMANCE ANALYSIS OF TIER 1 NPS SCHEMES FOR GOVERNMENT EMPLOYEES | | Author Name : | | | M GANGU NAIDU | | Publisher : | | | Ashok Yakkaldevi | | Article Series No. : | | | ISRJ-87 | | Article URL : | |  | Author Profile | | Abstract : | | | The National Pension System (NPS) is a defined contribution based pension system launched by Government of India with effect from 1 January 2004. Like most other developing countries, India does not have a universal social security system to protect the elderly against economic deprivation. As a first step towards instituting pension reforms, Government of India moved from a defined benefit pension to a defined contribution based pension system. Apart from offering wide gamut of investment options to employees, this scheme would help government of India to reduce its pension liabilities. Unlike existing pension fund of Government of India that offered assured benefits, NPS has defined contribution and individuals can decide where to invest their money. Scheme Preference is the Pension fund schemes option chosen by the subscriber for investing the pension contribution amount. At present, there is only one default scheme for Tier I. The contribution of all the Subscribers will be invested in this default scheme. In the default scheme, the contribution is allocated to three PFMs, viz. SBI Pension Funds Private Limited, UTI Retirement Solutions Limited and LIC Pension Fund Limited in a predefined proportion and each of the PFMs will invest the funds in the proportion of 85% in fixed income instruments and 15% in equity and equity related instruments. For Tier II, the government subscriber has been given the flexibility to choose one out of six Pension Fund Managers (PFMs) and also the percentage in which the selected PFM will invest the funds. For Central Government employees mandatorily covered under NPS, the total contribution uploaded in an employee's Tier I account is divided among three PFMs. in a predefined ratio and units are allotted in the subscribers account. For State Government employees mandatorily covered under NPS, the total contribution uploaded in an employee's Tier I account is divided among the three PFMs. in a ratio as decided by the State Government and units are allotted in the subscribers account accordingly. The PFMs invest the money in different financial instruments within the investment guidelines laid down by PFRDA and declare Net Asset Value (NAV) at the end of each business day. The objective of this report is to analyze the performance of the NPS schemes for central and state government employees. | | Keywords : | | - asset classes
- central government employees scheme
- equity market
- net asset value
- national pension scheme
- pfrda
- state government employees schemes.
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