NPS: If you have invested in NPS, here's important news for you: today is the last chance to change your scheme..

Scheme A, which was part of the Tier 1 account of the National Pension System (NPS), will no longer be operated as a separate scheme. The PFRDA has decided to merge this scheme with Schemes C and E. The aim is to make the NPS portfolio larger, more liquid, and more efficient. Scheme A was designed for alternative assets, including investments in REITs, InvITs, and AIFs. These are assets that are neither direct equities nor bonds. However, Scheme A had a small corpus and limited investment options, resulting in weak liquidity.

If you have invested in Scheme A under the Active Choice option in your NPS Tier 1 account, you have until December 25, 2025, to switch your entire accumulated fund to other asset categories such as Scheme E, Scheme C, or Scheme G without any fees.

What happens if investors take no action?

For investors who do not make a decision by the deadline, an automatic process will be implemented. After December 25, their funds in Scheme A will be automatically merged into Schemes C and E according to the rules set by the PFRDA.
What benefits will investors receive from the merger?

This change will move investors' money into larger and more diversified funds. Schemes C and E are already more liquid and have robust fund management. In the long term, this increases the likelihood of better and more stable growth for retirement savings.

What is the switching process?
Investors can log in to their NPS account through the CRA portal or Point of Presence. There, they need to select the asset allocation or scheme switch option and choose the new scheme. The entire process is online, and no additional charges will be levied.

What other schemes are available in NPS besides Scheme A?
In the National Pension System (NPS), investments under the Tier 1 account are divided into different asset classes. Each scheme has a different risk and return profile, allowing investors to choose according to their age and needs.

What is Scheme E?
Scheme E refers to equity investments. Money is invested in companies listed on the stock market. The risk is higher, but the potential for the highest returns in the long term is also greatest here. This scheme is considered more suitable for young investors and those who have a long time until retirement.

What is Scheme C?
In Scheme C, money is invested in corporate bonds and debt instruments of companies. The risk is lower than equity but slightly higher than government bonds. Scheme C is considered a balanced option for investors who want stable but better returns.

What is Scheme G?
Scheme G invests entirely in government bonds and government securities. This is the safest scheme, but its returns are also limited. Investors nearing retirement or those with a low-risk tolerance typically choose this scheme.

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