The big demand of central employees has been fulfilled. In fact, the government has approved two new investment options for central government employees under the National Pension System (NPS) and Unified Pension Scheme (UPS) – ‘Life Cycle’ and ‘Balanced Life Cycle’.
The Finance Ministry said these options are designed to increase flexibility in retirement planning and allow employees to manage their retirement funds in line with individual preferences. Let us tell you that this decision fulfills the much awaited demand of the central government employees. Their demand was that they should also be given more investment options in these pension schemes like non-government employees.
What are the two options?
Under NPS and UPS, central government employees can now choose from multiple investment options. There is a default option which is the ‘default pattern’ of investment as defined by the Pension Fund Regulatory and Development Authority (PFRDA) from time to time. The second option is Scheme-G in which 100 per cent investment will be in government securities for low risk, assured returns. Let us tell you that NPS was started in the year 2004, while UPS was approved by the Central Government in 2004. UPS approved from April 2025.
What is Life Cycle Option?
The maximum equity allocation under the Life Cycle (LC-25) option is 25 per cent, which gradually reduces from age 35 to 55, while the maximum equity allocation in the LC-50 option is limited to 50 per cent of the retirement corpus. Similarly, the Balland Life Cycle (BLC) option is a modified version of the LC50, in which the equity allocation tapers off from the age of 45 so that employees can invest in equities for a longer period. Whereas in the LC75 option, the maximum equity allocation is 75 percent, which gradually reduces from the age of 35 to the age of 55.