Who Are NPS Fund Managers and What Are Their Duties
The National Pension System or NPS scheme is an investment strategy focused on retirement. However, NPS investors make a few common mistakes when opening NPS accounts that could affect their monthly pension and the withdrawal amount at retirement. This is where an NPS fund manager can help. This blog helps understand the role of NPS fund managers, how they work, best NPS fund managers and things to keep in mind before selecting an NPS fund manager. Read on!
NPS Fund Manager Meaning and Their Duties
Similar to mutual fund managers, NPS fund managers are finance professionals who assist you in managing your funds efficiently and thereby, are paid a small fee for their services.
The duties of NPS Fund managers are listed below.
- Pooling money from investors to invest in various asset classes to generate the maximum returns at suitable risk.
- Investing the pooled funds in accordance with the Investment Policy and Authority’s regulations.
- Regularly evaluating the performance of the investments to ensure they are generating optimum returns.
How Do NPS Fund Managers Work?
A pension fund manager invests the pension funds that are gathered in a variety of assets. NPS fund managers divide these funds among three asset classes: stocks, corporate bonds and Government securities.
In other words, an NPS Fund Manager manages the pension funds allocated by every investor in a judicious manner. To make sure the investments are operating effectively, the fund managers also conduct a cyclical review. NPS fund managers are paid a fee in exchange for their services. The charge is determined by the average number of assets they manage.
Also read: https://navi.com/blog/fund-of-funds/
8 Best NPS Fund Managers in India
The following names listed are the best pension fund managers for NPS:
- Aditya Birla Sun Life Pension Management Limited.
- HDFC Pension Management Company Limited.
- UTI Retirement Solutions Limited.
- SBI Pension Funds Private Limited.
- ICICI Prudential Pension Funds Management Company Limited.
- Reliance Pension Fund.
- Kotak Mahindra Pension Fund Limited.
- LIC Pension Fund.
Top Performing NPS Fund Managers – Central Government Schemes
The best pension fund managers for NPS – Central Government Schemes are:
- SBI Pension Fund
- UTI Retirement Solutions
- LIC Pension Fund
Best Performing NPS Fund Managers – State Government Schemes
The best NPS fund manager- State Government Schemes are:
- SBI Pension Fund
- UTI Retirement Solutions
- LIC Pension Fund
Also read: https://navi.com/blog/equity-mutual-funds/
Scheme G NPS Fund Manager Performance
The Scheme G NPS funds are nothing but Government securities/bonds. The performance for the best NPS Fund Managers is given below:
Top Performing Pension Fund Managers- Scheme G (2014-2021)
| SBI | HDFC | KOTAK | UTI | ICICI PRU | |
|---|---|---|---|---|---|
| 2014 | 20.4 | 19.7 | 19.2 | 20.0 | 20.4 |
| 2015 | 6.9 | 6.6 | 7.0 | 7.0 | 6.9 |
| 2016 | 17.2 | 16.9 | 17.8 | 16.3 | 17.0 |
| 2017 | 2.8 | 2.4 | 2.5 | 2.0 | 2.6 |
| 2018 | 8.7 | 8.9 | 8.5 | 7.8 | 8.7 |
| 2019 | 12.5 | 12.6 | 12.8 | 12.9 | 12.2 |
| 2020 | 13.5 | 14.3 | 13.2 | 13.0 | 13.3 |
| 2021 | 1.7 | 1.5 | 2.0 | 1.2 | 1.8 |
The above table demonstrates the performance of the major NPS fund managers namely State Bank of India, HDFC, Kotak, UTI and ICICI Prudential. The performance has been calculated for a period of 8 years from 2014 to 2021. With the highest performance being in 2014 and the lowest in 2021.
Scheme E NPS Fund Manager Performance
The Scheme E of the NPS denotes equities. Most of the Equities by the Pension Fund Managers stand at an average of 14.5%
Top Performing Pension Fund Managers- Scheme E (2014-2021)
| SBI | HDFC | KOTAK | UTI | ICICI PRU | |
| 2014 | 32.7 | 33.1 | 32.7 | 32.4 | 33.5 |
| 2015 | -2.6 | -2.7 | -2.3 | -1.2 | -2.6 |
| 2016 | 5.6 | 6.6 | 4.8 | 6.5 | 5.6 |
| 2017 | 28.0 | 31.7 | 34.5 | 31.0 | 29.0 |
| 2018 | 2.4 | 2.0 | -2.5 | 1.7 | 0.9 |
| 2019 | 9.3 | 11.9 | 12.4 | 9.1 | 11.5 |
| 2020 | 15.0 | 16.5 | 14.4 | 14.4 | 15.2 |
| 2021 | 25.9 | 28.4 | 29.3 | 27.8 | 28.8 |
The above table demonstrates the performance of the major NPS fund managers namely State Bank of India, HDFC, Kotak, UTI and ICICI Prudential. The performance has been calculated for a period of 8 years from 2014 to 2021. With the highest performance being in 2014 and the lowest in 2015. HDFC has been witnessing a high performance rate followed by SBI and Kotak.
Scheme C NPS Fund Manager Performance
The Scheme C in NPS tells us about the Corporate Debt Funds.
Top Performing Pension Fund Managers- Scheme C (2014-2021)
| SBI | HDFC | KOTAK | UTI | ICICI PRU | |
| 2014 | 14.7 | 14.1 | 14.6 | 14.3 | 14.6 |
| 2015 | 9.5 | 9.9 | 9.8 | 9.5 | 10.9 |
| 2016 | 13.5 | 13.3 | 14.2 | 13.5 | 13.8 |
| 2017 | 6.0 | 6.5 | 5.8 | 5.9 | 6.1 |
| 2018 | 6.0 | 5.4 | 4.9 | 5.1 | 6.1 |
| 2019 | 12.9 | 13.6 | 11.5 | 11.1 | 13.1 |
| 2020 | 12.1 | 12.4 | 10.6 | 13.0 | 11.3 |
| 2021 | 4.4 | 5.0 | 4.5 | 4.0 | 4.6 |
The above table demonstrates the performance of the major NPS fund managers namely State Bank of India, HDFC, Kotak, UTI and ICICI Prudential. The performance has been calculated for a period of 8 years from 2014 to 2021. With the highest performance being in 2014 and the lowest in 2021. HDFC has been witnessing a high performance rate followed by ICICI Prudential.
How to Select the Best Fund Manager to Invest in an NPS Scheme?
When you opt for an NPS scheme, you will have to choose between the two investment options- auto choice and active choice. If you opt for active choice, you will have to choose a fund manager to work on an asset allocation strategy.
For this, it is important that you consider the track record of the asset class where the majority of your funds will be invested. Based on this, you assess the performance of an NPS fund manager vis-a-vis the track record of the fund they manage. Consider the rolling returns of the fund that the fund manager manages.
It is also important that you select your fund manager on the basis of what kind of investor you are. Here is a brief explanation of how this can help you:
- Aggressive Investor
- Moderate Investor
- Conservative Investor
- Super Safe Investor
The below table will help you understand how the different categories of investors split the asset that has been allocated into the E, C G schemes.
| Investors | Equity (E) | Corporate Bonds(C) | Government Bonds(G) |
| Aggressive | 75% | 10% | 15% |
| Moderate | 50% | 25% | 25% |
| Conservative | 25% | 20% | 55% |
| Ultra-Safe | 5% | 15% | 80% |
These categories will help you allocate your pension funds into equities, corporate bonds and government securities. By carrying out a simple portfolio analysis over the years, you will be able to decide which PFM will give you the highest returns and choose accordingly.
Do note that a default NPS Fund Manager will be assigned if you fail to choose a Fund manager. These include SBI Pension Funds, LIC Pension Funds, and UTI Retirement Solutions.
Things to Keep in Mind Before Selecting a Fund Manager
It is essential that the pension fund manager in NPS be in sync with your investment horizon, financial goals and risk profile. Therefore, selecting a fund manager carefully is of utmost importance. According to the NPS rules, you can choose different fund managers for Tier I and Tier 2 Accounts. However, you cannot choose different managers for the various schemes within the same tier. For example, if you have chosen Kotak Pension Fund, your corporate debt, equity fund, as well as Government securities will have to be from Kotak.
Final Word
The National Pension Scheme is definitely beneficial to people who are looking forward to their retirement and willing to spend it wisely by investing their funds in a judicious and efficient manner. Thus, it is always advisable to have an NPS Fund Manager to allocate your funds so as to manage risks and maximise your benefits.
FAQs on NPS Fund Manager
Ans: The National Pension System (NPS) is a defined-benefit retirement savings plan created to help citizens make the best choices for their future through methodical saving throughout their professional lifetime. The NPS aims to help citizens develop the habit of saving for their retirement.
Ans: While registering in the CRA system under NPS, an NPS Subscriber is asked to choose a Pension Fund Manager (PFM) and scheme preference. The subscriber has to choose from the four asset classes: equity, corporate debt, government bonds, and alternative investment funds. The subscriber chooses the Pension Fund Manager for NPS first and then the scheme.
Ans: A simple portfolio analysis over the years will help you understand where to allocate your assets and which Pension Fund Manager will be able to maximise your returns using those assets.
Ans: The Assets are allocated into Equities (E), Corporate Bonds(C), and Government Bonds(G).
