NPS risk labels: Will PFRDA’s new framework help subscribers make better choices
The National Pension System (NPS) has grown bulkier over the years. What started as a simplistic offering with two options has transformed into an investment marketplace. NPS subscribers now face more choices than ever. The retirement product now includes multiple lifecycle-oriented funds, specialized schemes, and differentiated strategies by pension funds. Schemes with different features, risk profiles and use cases are vying for attention within the same product shelf. And now, the NPS finds itself at a crossroads.
An expanding product universe complicates the whole basket. It makes comparison and selection very tricky. Mutual funds hit this wall years ago, which led to a proliferation of schemes of different hues and monikers under the same labels. In 2017, the Securities and Exchange Board of India (Sebi) tried to restore order with a directive on fund categorization and rationalization. The markets regulator followed it up with another round of rationalization earlier this year.
