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Tata Capital > Blog > Wealth Services > NPS Funds Unveiled: The Top 6 Choices for Wealth Growth

Wealth Services

NPS Funds Unveiled: The Top 6 Choices for Wealth Growth

NPS Funds Unveiled: The Top 6 Choices for Wealth Growth

Retirement is a phase of life that many anticipate with a mix of excitement and apprehension. It's the golden period where one envisions a life free from the daily grind, filled with travel, leisure, and cherished moments with loved ones.

However, to truly enjoy your retirement, meticulous planning is paramount. Starting early, understanding the power of compounding, and making informed decisions can make the difference between a comfortable retirement and a challenging one.

Amid the myriad retirement options, the National Pension Scheme (NPS) is among the best choices. It offers flexibility, diverse investment options, and significant tax advantages. In this article, you will find a comprehensive guide on the best NPS funds, including their features and benefits, to help you make an informed decision.

What is the NPS Fund?

The National Pension Scheme (NPS) is a government-sponsored pension scheme introduced to provide a structured retirement solution for Indian citizens. Launched in January 2004 initially for government employees, it was opened to all sections of the public in 2009.

The primary aim of the NPS is to enable subscribers to make regular contributions to a pension account throughout their working life, accumulate a retirement corpus, and then utilise it post-retirement to secure a stable income.

On retirement, a subscriber can withdraw a portion of the corpus as a lump sum and use the remaining amount to purchase an annuity, ensuring a steady income flow.

Contributions to the NPS are eligible for tax deductions. An individual's contribution is deductible up to 10% of the salary (basic + DA) under Section 80CCD (1) of the Income Tax Act. An extra deduction of up to Rs.50,000 is available under Section 80CCD (1B).

NPS offers two types of accounts:

1. Tier-I Account: This is a mandatory account with restricted withdrawals to ensure a retirement corpus. A minimum annual contribution of Rs.6,000 is required.

2. Tier-II Account: A voluntary account with more flexibility regarding withdrawals. However, it doesn't offer the tax advantages that the Tier-I account provides.

Pension Fund Managers manage the money invested in NPS registered with the Pension Fund Regulatory and Development Authority (PFRDA). Selecting the best pension fund manager is crucial to maximise your investments.

Best Pension Fund Managers 

1. Tata Pension Management Ltd. 

With its recent foray into pension fund management, Tata Pension Management has made significant strides in the pension sector. The company has introduced the Scheme E - TIER I, which predominantly invests in equity and is specifically designed for TIER I investors. This strategic move is a testament to the company's commitment to offering diverse investment options to its clientele.

While the returns for Tata Pension Fund have yet to be available due to its recent inception, several factors position it as one of the best pension fund managers for NPS. Firstly, being a part of the Tata group, it carries a legacy of trust, reliability, and excellence. The company's robust investment strategies and focus on long-term wealth creation make it a preferred choice for many NPS investors.

2. SBI Pension Fund

SBI Pension Fund has consistently showcased its prowess in the pension sector, finding itself among the best NPS fund managers for tier 1 schemes. This scheme predominantly invests in equity, making it an ideal choice for TIER I investors looking for growth and stability.

As of 31st January 2023, the SBI Pension Fund has outperformed many of its peers by generating an impressive return of 8.20% over the past five years under the NPS Central Government Scheme.

3. LIC Pension Fund

Under the renowned Life Insurance Corporation of India, the LIC Pension Fund has consistently showcased its strength in the pension sector. With its strategic investment approach, the fund has capitalised on market opportunities, ensuring steady growth for its investors.

As of 31st January 2023, the fund generated an impressive return of 8.18% over five years. Such commendable performance, combined with the fund's focus on a balanced risk profile, positions it as one of the best NPS Schemes for Tier 1investors.

4. UTI Retirement Solutions

UTI Retirement Solutions has been a notable player in the pension sector, offering a range of schemes tailored to cater to the diverse needs of its investors. One of the standout offerings of the company is the Tier 1 NPS scheme. The scheme predominantly focuses on equity investments and aims to balance growth and consistency for its investors.

Over the last five years, this fund has showcased an impressive performance, generating returns of 8.09%. This commendable track record, combined with its strategic investment approach, positions UTI Retirement Solutions as one of thebest Pension fund managers for NPS.

5. HDFC Pension Management

HDFC Pension Management has carved a niche in the pension sector with its innovative offerings and consistent performance. Over the last five years, the fund has delivered an outstanding return of 10.82%, reflecting its robust investment strategies and market insight.

What sets HDFC Pension Management apart is its meticulous focus on a balanced portfolio, ensuring a well-balanced and growth-oriented approach. This commitment to excellence and the backing of a trusted brand position HDFC Pension Management among the best pension fund managers in the NPS landscape.

6. Kotak Mahindra Pension Fund

Kotak Mahindra Pension Fund has been in the pension sector, showcasing excellent performance year after year. Its innovative offerings have set it apart in the fund's Scheme E - TIER I. 

Over the past five years, this fund has delivered a stellar performance, boasting returns of 10.21%. The achievements, unique features and strategic investment approach showcase Kotak Mahindra's dedication to ensuring optimal returns and security for its investors.

Parting Words

The journey to a comfortable retirement begins with informed decisions and strategic planning. The National Pension Scheme (NPS) offers a structured pathway to achieve this. However, the key to maximising the benefits of NPS lies in selecting the right pension fund manager. As we've seen, each fund manager brings its unique strengths to the table, and understanding these nuances can significantly impact the growth of your retirement corpus.

With a legacy of excellence and a commitment to customer-centric solutions, Tata Capital ensures that your golden years are truly golden. Step into the world of retirement planning with Tata Capital and explore our wide array of retirement solutions tailored to meet your unique needs. Visit the Tata Capital website for more information.

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