PFRDA Introduces New Balanced Life Cycle Fund (BLC) for NPS Subscribers

In an important development for National Pension System (NPS) subscribers, the Pension Fund Regulatory and Development Authority (PFRDA) has introduced a new fund option under the NPS called the Balanced Life Cycle Fund (BLC). This new fund aims to provide subscribers, including private sector employees and all citizens, with the option of automatic rebalancing of asset classes based on their age and risk profile.

Key Features of the Balanced Life Cycle Fund (BLC)

The BLC is designed to address the varying risk tolerance of individuals as they age. Below are the main highlights of the fund:

• Equity Allocation: The maximum equity exposure under BLC is capped at 50% for subscribers up to the age of 45. After this, the equity component gradually reduces each year.
• Asset Rebalancing by Age: The rebalancing will happen automatically, reducing exposure to riskier asset classes as the subscriber approaches retirement. The allocation to Asset Class E (Equity) will decrease after 45 years, and the allocation to Asset Class G (Government Bonds) will increase.

Asset Allocation Breakdown:

For easier understanding, here is the asset allocation strategy for different age brackets under the BLC:

Age	Asset Class E	Asset Class C	Asset Class G
Up to 45 Years	50%	30%	20%
46 Years	48%	28%	24%
47 Years	46%	26%	28%
48 Years	44%	24%	32%
49 Years	42%	22%	36%
50 Years	40%	20%	40%
51 Years	39%	18%	43%
52 Years	38%	16%	46%
53 Years	37%	14%	49%
54 Years	36%	12%	52%
55 Years & beyond	35%	10%	55%

This age-based asset allocation provides a balanced approach, making it suitable for individuals seeking moderate risk while preparing for retirement.

What Makes BLC Different?

The Balanced Life Cycle Fund (BLC) sets itself apart from existing NPS choices by offering a structured asset allocation strategy. Notably, the maximum equity allocation of 50% is maintained until the age of 45, which is higher compared to the existing life cycle funds where equity allocation begins tapering down at age 35.

Important Note: This fund does not replace the existing “Active” and “Auto” choices under NPS but rather offers an additional option for subscribers who want a well-balanced portfolio. Furthermore, the Moderate Life Cycle Fund (LC50) will continue to be the default choice for NPS subscribers.

Who Can Benefit?

• Private Sector Employees: Corporate NPS subscribers can opt for BLC if they prefer an automated asset rebalancing strategy.
• All Citizens: The BLC is also available to citizens who subscribe to the NPS, providing them with a balanced investment option for their retirement.

Final Thoughts

The introduction of the Balanced Life Cycle Fund (BLC) reflects PFRDA’s commitment to offering more diversified and tailored investment options for NPS subscribers. This fund is ideal for those who want automatic rebalancing based on their age, making it a practical choice for retirement planning.

For more information, you can visit the PFRDA website or refer to Circular No. PFRDA/2024/17/PDES/02 issued on 1st October 2024.