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A look at the returns from NPS

The New Pension Scheme for private citizens, who were allowed to join since May 2009, gave better returns than the one for government employees, which started from 2004 onwards.

For most fund managers, it was the corporate bond and government securities that gave more returns than equities.

On an average, the returns for private accounts were around 11% for 2010-11, which is less than one percentage point less than what NPS offered to private citizens in 2009-10.

While Kotak Mahindra Pension Fund gave the highest return in equities, SBI Pension Funds gave the highest returns in corporate bonds.

UTI Pension Fund gave the highest returns in government securities. For central government employees, the NPS has a return ranging between 8.05% to 8.45%, which is less than the 9.5% given by Employees Provident Fund Organisation.

Interestingly, the returns for state government employees were more than for the central government, which were between 9.88-11.34%.

For private citizens, up to 50% of their corpus can be invested in equities and the rest in government securities and corporate bonds.

For government citizens, only up to 15% of the total corpus is allowed to be invested in equities.

At present, the contribution amount of Government Employees is invested in the proportion of 33%, 32% and 35% amongst SBI, UTI and LIC respectively.

Upto May 2009, the allocation was 55%, 40% and 5% for SBI, UTI and LIC respectively. Then, it has been changed to 40%, 31% and 29% in SBI, UTI and LIC respectively on May 2009. In June 2010 it was again changed to the present allocation ratio of 33%, 32% and 35% SBI, UTI and LIC respectively.

The contribution amount is allocated as per the Government guidelines. According to the Fund Manager performance (reviewed by Ministry of Finance), the allocation ratio may change in the future.

Source: The Financial Express