In India, the National Pension System (NPS) is a well-liked retirement savings plan that provides a flexible investment framework and tax advantages. If you now subscribe to NPS, you may be wondering how to adjust your investing choices to better suit your financial objectives or the state of the market. The good news is that you may easily change your investing selections thanks to NPS. We’ll guide you through the process of altering your investment in your NPS account step-by-step in this post.
Why Would You Want to Change Your NPS Investment?
Let’s briefly discuss the why before moving on to the how. The following are some reasons you may want to reevaluate your alternatives for NPS investments:
Conditions of the Market: The financial markets are ever-changing. In light of shifting market conditions, you may choose to adjust your investments.
Life Stage: As you become older, you typically have less taste for risk. A younger individual might want to invest more in stocks, for instance, but a person getting close to retirement would want to stick with safer investments like government bonds.
Performance: You might wish to look at different possibilities if the schemes or fund managers you have selected are not performing up to par.
Risk Appetite: How you choose to allocate your NPS contributions may vary depending on how comfortable you are taking risks.
Step-by-Step Process to Change Your NPS Investment
Changing your NPS investment involves adjusting two primary elements:
- Asset Allocation (i.e., the percentage you wish to allocate to equity, corporate bonds, and government securities)
- Fund Manager (i.e., the entity managing your investments)
Here’s how you can do it:
1. Log in to Your NPS Account
- Visit the NPS Website: Go to the official NPS website at https://cra-nsdl.com or https://enps.nsdl.com.
- Enter Your Credentials: Log in using your Permanent Retirement Account Number (PRAN) and your password. If you’ve forgotten your password, you can reset it through the ‘Forgot Password’ option.
2. Navigate to the ‘Transaction’ Section
- Once logged in, go to the ‘Transaction’ tab located in the menu.
- Under this tab, you’ll find the option for ‘Change Scheme Preference’. Click on it.
3. Choose Your Investment Option
NPS offers two main investment choices:
- Active Choice: Allows you to choose your asset allocation across three categories: Equities (E), Corporate Bonds (C), and Government Securities (G).
- Auto Choice: Automatically adjusts your asset allocation based on your age. It follows a predefined lifecycle fund matrix. In this, you will see two choices- moderate and conservative choices. This is like lower your risk automatically and invest in safer funds.
- Select the Option: If you’re using Active Choice, you can manually enter the percentages for each asset class. If you select Auto Choice, pick one of the lifecycle fund options (Aggressive, Moderate, or Conservative).
4. Change Your Fund Manager (if needed)
You may also want to change the Pension Fund Manager (PFM) responsible for handling your investments. There are currently several PFMs available, including SBI Pension Funds, ICICI Prudential Pension Funds, and HDFC Pension Management.
- Select a Fund Manager: Choose from the list of available fund managers. If you’re satisfied with your current manager, you can skip this step.
5. Review and Confirm Your Changes
- After making your selections, review the details to ensure everything is accurate.
- Once you’re satisfied, submit your changes. You’ll typically need to enter a Transaction Password or an OTP (sent to your registered mobile number) to confirm the transaction.
6. Receipt and Confirmation
- After submission, you’ll receive a confirmation message on your screen.
- You can also download or print the transaction receipt for your records.
7. Track Your New Investment Strategy
- Monitor Performance: After changing your investment, it’s a good idea to periodically check how your new choices are performing.
- Adjust if Necessary: The NPS allows you to change your asset allocation and fund manager up to two times in a financial year. So, if market conditions or your financial goals change, you can always make adjustments.
Important Tips
Be Wary of Frequent adjustments: Although there is a lot of flexibility, making adjustments frequently might result in temporary losses. Maintaining focus on your long-term retirement objectives is crucial.
Recognize the Risk: There are risks associated with each asset type. For example, equities carry more risk than government assets, but they also have a bigger potential return.
Speak with a Financial adviser: Depending on your risk tolerance and retirement objectives, a financial adviser can assist you in making well-informed selections if you’re unclear about your options.
Read Also: Top Performing NPS Funds 2024: A Detailed Analysis
Read Also: How to Generate ₹1 Lakh Pension Per Month Using NPS
Conclusion
Although it’s a simple process, altering your NPS account’s investing options needs considerable thought. You may quickly modify your asset allocation or fund manager to better fit your financial objectives and the state of the market by following the above-described processes. Recall that the NPS is a long-term investment plan designed to protect your retirement, so any modifications have to be in line with your overall financial plan.
Please feel free to leave a comment below if you require extra information or if you have any further queries. Happy making purchases!
