The National Pension System has changed meaningfully over the past year.
The introduction of the Multiple Scheme Framework (MSF), greater flexibility in fund manager selection, and expanded equity allocation possibilities have altered how NPS should be evaluated.
Yet many investors continue to treat NPS as a static product — either opened years ago and never reviewed, or approached with the same mindset used for mutual funds: ranking short-term returns.
Both approaches miss the point.
NPS is not a trading vehicle.
It is a retirement architecture. Before examining fund manager performance, the primary question is whether the structure itself — allocation choice, fund-house selection, and risk orientation — remains aligned with your stage of life.
And before even structure, there is Behaviour.
The more important question is not “Who delivered the highest return?”
It is:
What type of return experience can you live with?
Every pension fund manager exhibits a behavioural pattern.
Some prioritise upside capture. Others emphasise downside protection and stability. Performance, therefore, cannot be consumed at face value —
It must be interpreted in the context of your own behavioural stage.
1a : The Five Behavioural Phases of NPS Investing
Retirement planning is not purely mathematical. It is behavioural.
A 28-year-old investor seeks acceleration.
A 45-year-old seeks balance.
A 58-year-old seeks protection.
Markets remain volatile across decades. Investor priorities do not remain constant.
That is why NPS allocation cannot remain static. It must evolve with the investor.
The retirement journey can be understood across five behavioural phases:
These are not personality labels. They reflect shifts in capital preservation priority as retirement approaches.
The practical implication of these stages is summarised below:
| Age | Behavioural Stage |
|---|---|
| 20–35 | Hungry & Hopeful |
| 36–45 | Measured & Mature |
| 46–50 | Careful & Conscious |
| 51–60 | Defensive & Deliberate |
| 60+ | Calm & Content |
Each stage demands a different expression of growth, risk control, and fund-house selection. But behavioural stage alone is not sufficient.
1b : Growth-Oriented vs Stability-Oriented: The Two Temperaments
At every life stage, investors broadly express risk in one of two ways:
Some are comfortable accepting volatility in pursuit of higher long-term compounding.
Others prioritise smoother return experience and downside control.
These are not right or wrong preferences. They are temperament choices.
In NPS, this translates into two broad orientations:
- Growth-Oriented: Willing to tolerate volatility for long-term compounding.
- Stability-Oriented: Prioritises predictability and capital preservation.
What changes across age is not the existence of these temperaments — but how they should be expressed.
A 30-year-old Growth-Oriented investor can afford concentration and volatility.
A 55-year-old Growth-Oriented investor cannot express risk the same way.
Similarly, a Stability-Oriented investor at 40 differs materially from one at 60.
When life stage and temperament intersect, allocation expression changes.
The matrix below illustrates this intersection.
1c : Behavioural Stage × Investment Orientation
| Age Band | Behavioural Stage | Growth-Oriented Expression | Stability-Oriented Expression |
| 20–35 | Hungry & Hopeful | 1. High equity bias (up to structural limits). 2. Accept volatility for compounding. 3. Focus on upside participation. | 1. Moderate equity exposure. 2. Participate in growth while prioritising smoother return experience. |
| 36–45 | Measured & Mature | 1. Growth with discipline. 2. Maintain strong equity allocation but avoid extreme concentration. | 1. Balanced allocation. 2.Emphasis on consistency and controlled drawdowns. |
| 46–50 | Careful & Conscious | 1. Selective growth. 2. Equity exposure retained but risk consciously moderated. | 1. Reduced equity tilt. 2. Strong focus on predictability and downside protection. |
| 51–60 | Defensive & Deliberate | 1. Limited, tightly controlled equity exposure. 2. Growth secondary to capital protection. | 1. Capital preservation dominates. 2. Equity minimal; stability primary objective. |
| 60+ | Calm & Content | 1. Opportunistic, limited equity exposure (typically tactical and modest in size). | 1. Predominantly debt-oriented. 2. Focus on income certainty and capital stability. |
Age determines capacity for risk. Temperament determines tolerance for risk.
Allocation must respect both. Performance without behavioural context leads to misallocation.
Performance interpreted through behavioural alignment leads to strategy.
The question now becomes:
2 : Which NPS architecture allows your behavioural stage and temperament to be expressed correctly?
Behaviour defines intent. Structure defines implementation.
NPS today offers three structural pathways — Each enables a different degree of control and precision.
2a : Choosing the Right NPS Structure: Auto vs Active vs MSF
- Auto Choice: An age-based allocation where NPS automatically adjusts your equity and debt mix as you grow older.
- Active Choice: A self-directed option where you decide how your money is split across asset classes within NPS limits.
- MSF (Multiple Scheme Framework): A flexible structure that allows you to combine schemes from different pension fund houses for greater allocation precision.
| Feature | Auto Choice | Active Choice | MSF (Multiple Scheme Framework) |
|---|---|---|---|
| Who decides asset allocation? | System decides based on age | You decide | You decide |
| Equity allocation | Automatically reduces as you age | You choose % within limits | You choose % within limits |
| Pension Fund Manager flexibility | One PFM | Can choose more than one PFM (within allowed limits) | Multiple PFMs across schemes |
| Asset class flexibility | Fixed lifecycle structure | Flexible within E / C / G / A | Flexible + can mix across fund houses by scheme |
| Structure style | Age-driven lifecycle | Investor-driven allocation | Role-based, scheme-specific allocation |
| Best suited for | Hands-off investors | Investors wanting allocation control | Investors wanting allocation + fund-house precision |
2b : Principles MSF
| 1️ MSF is Optional MSF is an additional framework under NPS and is not mandatory. Subscribers can continue with Auto or Active Choice if they prefer. |
| 2️ One PRAN, Multiple Schemes Under MSF, a single NPS account (PRAN) can hold multiple schemes simultaneously, removing the earlier restriction of one scheme per fund manager. |
| 3️ Multi-Fund Manager Flexibility MSF allows allocation across different Pension Fund Managers (PFMs). Equity can be with one fund house while debt or gilt exposure can be with another. |
| 4. Higher Equity Exposure Possible Certain MSF schemes may allow higher equity allocation — in some cases up to 100% — depending on the scheme structure and PFM offering. |
| 5. Tax Benefits Remain Unchanged All existing NPS tax benefits under Sections 80CCD(1), 80CCD(1B), and 80CCD(2) continue to apply to contributions made under MSF. |
| 6. Existing Corpus Is Not Automatically Migrated MSF applies prospectively. Existing investments remain under Auto or Active Choice unless separately reallocated within permitted rules. |
| 7. Separate NAVs and Transparency Each MSF scheme maintains independent NAV disclosures and reporting, enabling clearer performance tracking and comparison. |
| 8. Exit and Vesting Rules Continue to Apply MSF does not alter NPS withdrawal or vesting norms. Standard exit conditions, lock-in rules, and annuitisation requirements remain applicable. |
2c : Example Active Choice Vs MSF
The difference between Active Choice and MSF is best understood by seeing how a 35-year-old growth-oriented investor allocates under each structure.
| Feature | Active Choice | MSF (Multiple Scheme Framework) |
|---|---|---|
| Age & Profile | 35, Growth-Oriented | 35, Growth-Oriented |
| Maximum Equity Allowed | 75% | Up to 100% (scheme dependent) |
| Example Equity Allocation | 75% – HDFC Pension (Scheme E) | 100% – ICICI “DREAM” Plan (MSF Equity) |
| Debt Allocation | Minimum 25% must go to C/G | No mandatory debt if scheme permits |
| PFM Flexibility | Can choose more than one PFM (within limits) | Can choose schemes across multiple PFMs |
| Equity Aggressiveness | Moderately aggressive (capped) | Fully aggressive possible |
| Structural Constraint | Built-in diversification | High concentration possible |
| Risk Level | High but controlled | Potentially very high |
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3: How Pension Fund Managers Differ in Investment Style :
Once structure is selected, the next layer of decision-making begins.
Structure determines how allocation is divided. Fund manager selection determines how each asset class is executed.
Not all pension fund managers behave the same way across equity, corporate bonds, or government securities. Understanding these behavioural differences is critical to role assignment.
Each asset class rewards a different skill set.
Equity rewards compounding ability and risk management across cycles.
Government securities reward duration positioning and interest-rate cycle management.
Corporate bonds reward credit discipline and balance sheet assessment.
3a : Equity Funds :
| Category | PFMs | Equity Style | Best Suited For |
|---|---|---|---|
| Strong Growth Leaders | HDFC, UTI, ICICI Prudential | Strong long-term compounding with solid risk-adjusted behaviour | Growth-oriented investors (25–45 yrs) |
| Balanced & Consistent | Kotak, SBI, Aditya Birla Sun Life | Steady performance, moderate volatility | Investors seeking growth with stability |
| Conservative Leaning | LIC | Lower volatility, less aggressive equity stance | Stability-oriented / Pre-retirement investors |
| Emerging / Short Track Record | Tata, Axis, DSP | Limited multi-cycle data | Limited or satellite exposure only |
3b: Govt Funds :
The following tables categorise fund managers not by ranking, but by behavioural execution style within each asset class.
| Category | PFMs | Gilt Management Style | Best Suited For |
|---|---|---|---|
| Strong Duration Managers | HDFC, LIC, SBI | Longer maturity profiles; consistent 7Y returns; disciplined rate-cycle management | Stability-oriented investors (40+ yrs) |
| Balanced & Consistent | ICICI Prudential, Kotak, Aditya Birla | Moderate duration stance; steady mid-to-upper performance | Investors seeking predictable returns without extreme duration risk |
| Aggressive / Higher Duration Tilt | DSP | Very long average maturity; higher rate sensitivity | Tactical allocation, not core retirement anchor |
| Emerging / Short Track Record | Tata, Axis | Limited multi-cycle data; early-stage consistency | Limited exposure; not core allocation yet |
3c: Corporate Funds :
| Category | PFMs | Corporate Bond Style | Best Suited For |
|---|---|---|---|
| Strong & Consistent Leaders | HDFC, Kotak, ICICI Prudential | Strong 3Y–7Y consistency; balanced duration (~4.5–4.8 yrs); good credit quality | Core allocation for long-term investors (40+ yrs) |
| Stable Institutional Managers | SBI, LIC | Slightly lower CAGR but stable maturity profile; moderate credit stance | Stability-oriented investors |
| Quality-Focused but Moderate Returns | Aditya Birla Sun Life | High quality & diversification score; moderate performance | Conservative debt allocation |
| Higher Duration / Tactical Tilt | DSP | Slightly longer duration; decent quality metrics | Limited allocation; rate-cycle aware investors |
| Emerging / Short Track Record | Tata, Axis | Limited 3–5Y data; early performance reasonable | Satellite allocation only |
Under MSF, these behavioural differences are expressed through predefined scheme mandates.
However, scheme names should not be interpreted as recommendations.
They represent allocation philosophies that must still align with your behavioural stage and structural choice.
MSF enhances precision — it does not eliminate the need for judgement
4. How PFMs Structure Growth Within MSF
The table below outlines indicative Market-Linked Scheme Fund (MSF) variants offered by major Pension Fund Managers (PFMs) under NPS.
While scheme names differ, most “Growth / Equity / Advantage” variants are structured to allow 70–100% equity exposure, with varying degrees of debt, government securities, and cash allocation based on mandate and lifecycle design.
It is important to note that allocations are indicative and subject to PFRDA guidelines and scheme mandates.
4a: Schemes Names under MSF of Different PFM
| PFM | MSF Scheme Variant | Allocation Profile (Indicative) |
| Aditya Birla Sun Life Pension | ABSLPF Secure Retirement Equity Fund | Equity 90–100% |
| Axis Pension Fund | Axis PF NPS Golden Years Fund Axis PF NPS Conservative Plan (if available) | Equity 65–100%, Debt 0–35%, Cash/REITs 0–10% Lower equity/more debt focus (schemes vary by mandate) |
| DSP Pension Fund Managers | DSP PF NPS Long Term Equity Fund – Tier I DSP PF NPS Moderate (Potential Balanced Variant) | Equity 70–100%, Debt 0–20%, Cash 0–10% Moderate equity/debt mix (scheme mandates vary) |
| HDFC Pension | HDFC PF NPS Equity Advantage Fund HDFC PF NPS Surakshit Income Fund | Equity ~80–100% Equity ~50–75%, Govt & Corporate debt allocation |
| ICICI Prudential Pension Fund | ICICI PF NPS D.R.E.A.M. Plan (High Growth) ICICI PF NPS My Family My Future Plan | Up to 100% Equity Equity ~50–80%, Debt/Cash mix |
| Kotak Mahindra Pension Fund | Kotak PF NPS Kuber Equity Fund Kotak PF NPS Moderate Mix (if offered) | Equity ~80–100% Balanced exposure (equity + debt) |
| SBI Pension Funds | SBI PF NPS Jeevan Swarna Retirement Yojana SBI PF NPS Balanced Plan (varies by market) | Equity ~75–100% Mixed equity/debt allocation |
| Tata Pension Fund | Tata PF NPS Smart Retirement Fund Tata PF NPS Balanced Scheme (where available) | Equity ~70–100% Mixed allocation |
| UTI Pension Fund | UTI PF Wealth Builder NPS Equity Scheme UTI PF NPS Balanced Scheme | Equity ~90–100% Lower equity/more conservative mix |
| LIC Pension Fund | LIC PFL NPS Smart Balance (Tier I) | Equity 65–85%, Debt 15–35%, Other 0–5% |
5. Conclusion:
When you align behaviour, structure, and execution, NPS functions as intended — and you generate returns as an outcome rather than chasing them as a starting point.
Conversely, when these elements are misaligned, it can either result in unintended risk-taking or lead to under-investment relative to one’s time horizon.
5a. The 3-Layer Framework
- Behaviour – Your life stage and comfort with volatility define risk tolerance.
- Structure – Auto, Active, or MSF expresses that risk intent.
- Execution – Fund manager style determines how well that allocation is implemented.
5b. The Real Mistake
Most investors either:
- Open NPS and ignore it, or
- Compare it like a mutual fund and chase short-term returns.
NPS does not aim to win yearly rankings. Instead, it aims to build a retirement corpus over decades through disciplined allocation.
5c. What should be ideal objective ?
Not to find the “best” fund manager.
But to build the right structure — and review it as life evolves.
NPS is a long-term commitment to your future self. Treat it accordingly.
6. Frequently Asked Questions
1️⃣ What is the difference between Auto Choice, Active Choice and MSF in NPS?
Auto Choice follows a predefined age-based lifecycle allocation.
Active Choice allows you to decide asset allocation within prescribed limits.
MSF goes further by enabling scheme-level allocation across multiple fund houses, allowing greater structural precision.
2️⃣ Can I change my NPS from Auto or Active to MSF later?
Yes, subscribers can opt for MSF subject to prevailing NPS rules.
However, existing investments are not automatically restructured; changes apply prospectively unless reallocation is separately executed within permitted guidelines.
3️⃣ Is MSF better than Active Choice in NPS?
MSF is not inherently superior — it offers greater flexibility.
For investors who require scheme-level and fund-house precision, MSF can enhance control.
For others, Active Choice may be sufficiently aligned with their allocation needs.
4️⃣ How should I choose an NPS fund manager based on my age and risk profile?
Age determines your capacity for risk, while temperament determines tolerance.
Fund manager selection should reflect both — growth-oriented styles for longer horizons and stability-focused execution as capital preservation becomes a priority.
5️⃣ Does higher equity in NPS (up to 100% under MSF) make it riskier?
Higher equity exposure increases return variability and downside risk.
While 100% equity may suit long-horizon investors with high tolerance for volatility, it must be aligned with behavioural stage and overall retirement objectives.
