In a significant reform aimed at enhancing transparency for investors, the PFRDA has changed the naming conventions of NPS Life Cycle Funds
The Pension Fund Regulatory and Development Authority (PFRDA) has revised the names of National Pension System (NPS) life cycle funds to clearly reflect their respective risk–return profiles and equity exposure levels.
The update, announced through a new circular, aims to make investment options easier for subscribers to understand and compare.
According to the circular, the Balanced Life Cycle Fund has now been included in the Auto Choice category, aligning with the regulator’s effort to improve consistency between fund names and their underlying risk structure. PFRDA said the review revealed that the Balanced Life Cycle Fund had a higher equity exposure than the Life Cycle 75 Fund — which is categorised as aggressive — highlighting the need for a clearer framework.
The revised names under the Auto Choice option are:
- Life Cycle 25 – Low (5E/55Y): Conservative fund with 25% equity exposure until age 35, tapering to 5% by 55.
- Life Cycle 50 – Moderate (10E/55Y): Balanced fund with 50% equity up to age 35, reducing to 10% by 55.
- Life Cycle 75 – High (15E/55Y): Aggressive fund with 75% equity exposure until age 35, tapering to 15% by 55.
- Life Cycle – Aggressive (35E/55Y) (formerly Balanced Life Cycle Fund): Retains 50% equity up to 45 years, falling to 35% by 55.
Each fund now carries a tagline designed to convey its objective and risk profile, from “steady growth” for conservative investors to “accelerated wealth creation” for aggressive ones.
The move is part of a broader effort to enhance transparency and comparability among NPS options. PFRDA has also reclassified the investment categories under NPS Auto Choice and Active Choice as Common Schemes (CS), following its 16 September circular. Under the new Multiple Scheme Framework (MSF), subscribers can allocate investments across several schemes managed by one or more pension funds under a single Permanent Retirement Account Number (PRAN).
The regulator believes the renaming and MSF structure will help subscribers align their portfolios more accurately with their financial goals, age, and risk appetite, while improving the overall transparency of NPS products.
By simplifying fund names and providing more flexibility through MSF, PFRDA seeks to make the National Pension System more accessible and comprehensible, especially for retail investors planning for long-term retirement security.
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