After 13 years of investing within the NPS my return is 8.78%


I’ve invested within the Nationwide Pension Scheme (NPS) since eighth March 2010. It is a efficiency report of how the NPS invested has fared over the past 13+ years. We additionally examine the returns with EPF.

Observe: Kindly don’t assume that I’m recommending NPS devices. My scenario is kind of totally different from most. NPS is a compulsory funding for me and a full substitute for GPF. If you’re in a company setup, please recognise that NPS has a lock-in of as much as 60. Most company staff won’t work till that age. In case you exit earlier than 60, 80% of your corpus can be locked into an annuity. So our advice has at all times been to not put money into NPS.

Additionally, see:

My NPS corpus is about 40% of my fairness MF + shares corpus tagged to retirement. It’s about 24% of my complete retirement portfolio. It has taken a lifetime to cut back the dependence on NPS. For extra particulars, see Fourteen Years of Mutual Fund Investing: My Journey and classes realized.

I’ve been a part of the NPS since 2006. Nevertheless, the NPS was not prepared for funding then. Till then, the organisation F&A held the cash with 8% annual curiosity. The primary funding into NPS funds was made on eighth March 2010.

We will observe the progress from that date. The cash was virtually equally divided among the many three Tier 1 (central govt) schemes supplied by UTI, LIC and SBI. The asset allocation was 15% fairness and the remainder 85% in bonds (principally gilts).

NPS with employer contribution is without doubt one of the greatest step-up SIPs right into a mutual fund. My month-to-month funding at the moment is 5 instances greater than ten years in the past. That may be a 13.65% year-on-year funding improve spanning two pay commissions and a promotion. You’ll be able to see that within the curvature of the overall funding line under.

That is the expansion of the NPS portfolio together with complete investments. The XIRR as of twenty second April 2022 is 8.78%. In Aug 2022, it was 8.95%, so not too shabby. Previous to the speed hikes, it was 10%-ish.

Normalized growth of my NPS investments from Mar 2010 to April 2023
Normalized progress of my NPS investments from Mar 2010 to April 2023

In July 2013, the RBI elevated in a single day charges by 2% to cease the autumn of the Rupee. My gilt-heavy NPS portfolio took a mighty tumble.  That is what the NAV regarded like in Oct 2013. My NPS CAGR simply earlier than the autumn was 11% ish, and in a single day it turned 6-ish%, recovering over the subsequent few months. When this occurred, PFRDA realised, “Aisa bhi hota hai! What if this occurs simply earlier than the individual retires?!” and launched staggered withdrawals.


Annotated lack of achieve within the NPS portfolio. The center oval is the covid crash in March 2020.

Total gain or loss in my NPS portfolio from March 2010 to April 2023
Whole achieve or loss in my NPS portfolio from March 2010 to April 2023


This compares the NPS NAV (the SBI central govt fund has been used as a consultant) and the EPF NAV (constructed from annual rate of interest historical past).

Growth of NPS Central Govt Scheme vs EPF from March 2010 to April 2023
Development of NPS Central Govt Scheme vs EPF from March 2010 to April 2023

On the time of writing, NPS has outperformed EPF, however that will not at all times be true! If I had invested in EPF as a substitute of NPS ten years in the past, the NAV evolution (assuming each day progress = annual curiosity/365) would appear like this.

Imaginary growth of EPF investment from March 2010 to April 2023
Imaginary progress of EPF funding from March 2010 to April 2023

It’s exhausting to beat the non-volatile progress of EPF however not too shabby for a compulsory funding! The asset allocation of central govt staff can now be modified. I’ve not modified it (and suggest others to not do it too). Utilizing NPS as a pure-debt fund and managing fairness individually is greatest (see hyperlinks under)

Additionally, see:

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