National Pension System

The government has given a big gift to the central government employees. The government has approved providing new investment options like LC75 and BLC under the National Pension System (NPS) and Unified Pension Scheme (UPS). This decision fulfills the long-standing demand of the employees who wanted more investment options like non-government subscribers.

The move is aimed at giving employees more flexibility in retirement planning and giving them the freedom to decide their investment strategy as per their convenience. With this, government employees will also be able to invest as per their risk appetite and retirement goals. Pension Fund Regulatory and Development Authority (PFRDA) has issued detailed guidelines for this. Now central employees will be able to choose from a variety of investment options under NPS and UPS.

• Default option: This is a fixed investment pattern, which is prescribed by PFRDA from time to time.
• Scheme G: It invests 100% in government securities, which is suitable for those seeking low risk and stable returns.
• LC-25: In this, a maximum of 25% can be invested in equity (stock market), which gradually reduces with age.
• LC-50: In this, the limit of equity investment remains up to 50%, which gradually decreases between the age of 35 to 55 years.
• BLC (Balanced Life Cycle): This is a modified form of LC-50, in which equity investment starts decreasing from the age of 45. This gives employees an opportunity to remain invested in the stock market for a long time.
• LC-75: This is the option with the highest risk and return, in which equity investment up to 75% is allowed. This part gradually decreases with increasing age.

Government employees will benefit

The government says that this system will give more flexibility and control to the employees. Under the new scheme, glide path mechanism has been adopted, according to which as the age of the employee increases, his equity investment automatically reduces. By the age of 55, the equity share reduces to 15% in LC75 and 35% in BLC.

Experts believe that this decision is a major improvement in retirement planning for employees. Now they will get the freedom to invest their pension amount more wisely and as per their risk tolerance. This initiative of the government will not only provide diverse investment options to the employees but will also help them ensure better returns and a stable future.