Best NPS Funds in India that are rocking in 2019

Best NPS Funds in India that are rocking in 2019


One of the best ways to do retirement planning is to invest in NPS Funds. NPS funds have been performing well in the last 5-10 years and gave up to 12% annualized returns. Some of these NPS Funds have provided 21% returns in the last 1 year. Hence, these are attracting the investors now. While NPS funds are providing good returns, these also provide income tax benefits u/s 80C.  Which are the Best NPS Funds that are rocking now in 2019? Who is the Best NPS Funds Manager in 2019 in India?

Also Read: Term Insurance Plans with Returns – Should you opt?

What is National Pension Scheme (NPS)?


If you are already aware of this, skip this section.

National Pension Scheme (NPS) is a government approved pension scheme for Indian citizens in the age group of 18 to 60 years. Apart from Central and State Government employees, other investors too can subscribe to this NPS. This is one of the good retirements saving scheme in India has become popular recent times.

What are various asset classes available in NPS?


It has 3 asset classes:

a) Equity plans (Class E) – Which invests majorly in equity related instruments. This is high risk-high return option. Good for high risk investors.

b) Govt bond plans (Class G) – This NPS fund invests in Govt securities like govt bonds, etc., This provides high safety to the investments. It is a low risk-low return option. Good for low risk investors.

c) Corporate bond plans (Class C) – Which invests in securities other than govt securities like investing in corporate bonds, corporate securities etc.,. This is high risk-medium return option. Good for moderate to high risk investors.

What are the accounts available under NPS?


There are 2 accounts which are offered as part of NPS Scheme. Tier-I account and Tier-II account.

Tier-I NPS account – Investments can be made into this account, however, it has restriction in terms of withdrawal of the funds from this account. 

Tier-II NPS account – Investments can be made into this account without any restrictions on the withdrawal of the funds from this account.

Apart from above, there is a Swavalamban NPS scheme / NPS Lite for Govt. Employees.

What are income tax benefits available for investments made in NPS?


Here are the details of income tax benefits of the investments made in NPS

1) Income Tax Benefits for investments in Tier-1 NPS account


a) Any investments made in the Tier-1 NPS account are eligible for income tax rebate upto Rs 1.5 Lakhs u/s 80CCD (1) of income tax act.

b) Any investments made in the Tier-1 NPS account are eligible for income tax rebate upto Rs 50,000 u/s 80CCD (1B) of income tax act. This is over and above Rs 1.5 Lakhs indicated above.

c) Means you can simply invest upto Rs 2 Lakhs in NPS scheme of Tier-1 and get complete income tax benefit. Alternatively, you can invest in other tax saving investment options u/s 80C upto Rs 1.5 Lakhs and invest Rs 50,000 in an NPS Teir-1 scheme and get tax exemption u/s 80CCD (1B).

d) If an employer has contributed to NPS fund, the employee can claim this as income tax exemption u/s 80CCD (2) of IT act. This is applicable for salaried employees only. The least of the following can be claimed as income tax exemption 1) Actual contribution by the employer to NPS fund 2) 10% of basic+DA (15% for Central Govt employees) 3) Gross total income of the employee.

2) Income Tax Benefits for investments in Tier-2 NPS account


a) There are no income tax benefits for contributions made in Tier-2 of NPS account.

b) However, Central Govt employees can get income tax benefits for amounts invested in Tier-2 account w.e.f. 1-April-2019 which is optional. However, if they are claiming this as a tax benefit, the amount would be locked and not eligible for withdrawals for 3 years.

Best NPS Funds in India that are rocking in 2019


Let us quickly analyze some of the Best NPS Funds to invest in 2019. We have classified these NPS funds based on the plans available.

1) NPS Funds from Central Government Plans. These funds are available only for central government employees.

2) NPS Funds from State Government Plans. These funds are available only for state government employees.

3) NPS Funds from NPS Lite – Swavalamban Plans

4) NPS Funds from Tier-I – Equity Plans

5) NPS Funds from Tier-I – Govt Bond Plans

6) NPS Funds from Tier-I – Corporate Debt Plans

7) NPS Funds from Tier-II – Equity Plans

8) NPS Funds from Tier-II – Govt Bond Plans

9) NPS Funds from Tier-II – Corporate Debt Plans

Source of the data Valueresearch Online. Now let’s get into details.

1) Best NPS Funds in 2019 from Central Government Plans


There are only 3 fund managers offering NPS for Central Government Employees i.e. SBI, UTI and LIC.

a) The SBI Pension Fund is the best performing NPS fund in this category. This fund generated 10.44% annualized returns in the last 5 years and 13.54% returns in the last 1 year. If one would have invested Rs 5,000 per month through SIP for 5 years, the investment amount would have been Rs 3 Lakhs (5,000 x 60) and your fund value would have grown to Rs 3.82 Lakhs.

b) In the short term of 1 year, the SBI Pension Fund and LIC Pension Fund have given good returns a long.

c) Here is the list of NPS Funds under Central Govt Plans and their performance.

Best NPS Funds in 2019 - Central Government Plans

2) Best NPS Funds in 2019 from State Government Plans


Here too, there are only 3 fund managers offering NPS for State Government Employees i.e. SBI, UTI and LIC.

a) The SBI Pension Fund is the best performing NPS fund in this category. This fund generated 10.51% annualized returns in the last 5 years and 13.63% returns in the last 1 year. If one would have invested Rs 5,000 per month through SIP for 5 years, the investment amount would have been Rs 3 Lakhs (5,000 x 60) and your fund value would have grown to Rs 3.82 Lakhs.

b) In the short term of 1 year, along with the SBI Pension Fund and LIC Pension Fund have given good returns for 1 year.

c) Here is the list of NPS Funds under State Govt Plans and their performance.

Best NPS Funds in 2019 - State Government Plans

Also read: Best Midcap Mutual Funds for 2019

3) Best NPS Funds in 2019 from NPS Lite – Swavalamban Plans


There are 4 fund managers offering NPS for Government Employees under NPS Lite i.e. SBI, UTI, LIC and Kotak.

a) SBI Pension Fund is the best performing NPS fund in this category. This fund generated 10.42% annualized returns in the last 5 years and 13.34% returns in the last 1 year. If one would have invested Rs 5,000 per month through SIP for 5 years, the investment amount would have been Rs 3 Lakhs (5,000 x 60) and your fund value would have grown to Rs 3.82 Lakhs.

b) In the short term, along with the LIC Pension Fund and SBI Pension Fund have given good returns for 1 year.

c) Here is the list of NPS Funds in NPS Lite (Swavalamban) Plans and their performance.

Best NPS Funds in 2019 - NPS Lite - Swavalamban Plans

4) Best NPS Funds in 2019 from Tier-I – Equity Plans


Here is the performance of NPS Funds under this category.

a) HDFC Pension Fund is the best performing NPS fund in this category. This fund generated 10.64% annualized returns in the last 5 years and 7.69% returns in the last 1 year. If one would have invested Rs 5,000 per month through SIP for 5 years, the investment amount would have been Rs 3 Lakhs (5,000 x 60) and your fund value would have grown to Rs 3.93 Lakhs.

b) In the short term of 1 year, the HDFC Pension Fund and Kotak Pension fund have outperformed among the NPS funds.

c) Here is the list of NPS Funds in Tier-I Equity Plans and their performance.

Best NPS Funds in 2019 - Tier-I-Equity Plans

5) Best NPS Funds in 2019 from Tier-I – Govt Bond Plans


Here is the performance of NPS Funds under this category.

a) LIC Pension Fund is the best performing NPS fund in this category. This fund generated 11.86% annualized returns in the last 5 years and 19.59% returns in the last 1 year. If one would have invested Rs 5,000 per month through SIP for 5 years, the investment amount would have been Rs 3 Lakhs (5,000 x 60) and your fund value would have grown to Rs 4.01 Lakhs.

b) In the short term of 1 year, the LIC Pension Fund and Kotak Pension fund have outperformed among the NPS funds.

c) Here is the list of NPS Funds in Tier-I Government Bond Plans and their performance.

Best NPS Funds in 2019 - Tier-I-Government Bond Plans

6) Best NPS Funds in 2019 from Tier-I – Corporate Debt Plans


Here is the performance of NPS Funds under this category.

a) ICICI Prudential Pension Fund is the best performing NPS fund in this category. This fund generated 10.29% annualized returns in the last 5 years and 12.52% returns in the last 1 year. If one would have invested Rs 5,000 per month through SIP for 5 years, the investment amount would have been Rs 3 Lakhs (5,000 x 60) and your fund value would have grown to Rs 3.8 Lakhs.

b) In the short term of 1 year, Birla Sun Life Pension Scheme and ICICI Prudential Pension fund have outperformed among the NPS funds.

c) Here is the list of NPS Funds in Tier-I Corporate Bond Plans and their performance.

Best NPS Funds in 2019 - Tier-I-Corporate Debt Plans

7) Best NPS Funds in 2019 from Tier-II – Equity Plans


Here is the performance of NPS Funds under this category.

a) UTI Retirement Solutions is the best performing NPS fund in this category. This fund generated 10.67% annualized returns in the last 5 years and 6.87% returns in the last 1 year. If one would have invested Rs 5,000 per month through SIP for 5 years, the investment amount would have been Rs 3 Lakhs (5,000 x 60) and your fund value would have grown to Rs 3.87 Lakhs.

b) In the short term of 1 year, the Kotak Pension Fund and HDFC Pension fund have outperformed among the NPS funds.

c) Here is the list of NPS Funds in Tier-II Equity Plans and their performance.

Best NPS Funds in 2019 - Tier-II-Equity Plans

8) Best NPS Funds in 2019 from Tier-II – Govt Bond Plans


Here is the performance of NPS Funds under this category.

a) The LIC Pension Fund is the best performing NPS fund in this category. This fund generated 11.88% annualized returns in the last 5 years and 20.66% returns in the last 1 year. If one would have invested Rs 5,000 per month through SIP for 5 years, the investment amount would have been Rs 3 Lakhs (5,000 x 60) and your fund value would have grown to Rs 4.04 Lakhs.

b) In the short term of 1 year, LIC Pension Fund and HDFC Pension fund have outperformed among the NPS funds.

c) Here is the list of NPS Funds in Tier-II Government Bond Plans and their performance.

Best NPS Funds in 2019 - Tier-II-Government Bond Plans

Also Read: Best Largcap Mutual Funds to invest in India 2019

9) Best NPS Funds in 2019 from Tier-II – Corporate Debt Plans


Here is the performance of NPS Funds under this category.

a) ICICI Prudential Pension Fund is the best performing NPS fund in this category. This fund generated 10.15% annualized returns in the last 5 years and 12.2% returns in the last 1 year. If one would have invested Rs 5,000 per month through SIP for 5 years, the investment amount would have been Rs 3 Lakhs (5,000 x 60) and your fund value would have grown to Rs 3.78 Lakhs.

b) In the short term of 1 year, ICICI Prudential Pension fund and HDFC Pension fund have outperformed among the NPS funds.

c) Here is the list of NPS Funds in Tier-II Corporate Bond Plans and their performance.

Best NPS Funds in 2019 - Tier-II-Corporate Debt Plans

Who is the Best NPS Funds Manager?


It is very difficult to say about who is the Best NPS Fund manager as there is mixed performance across various categories.

1) If you are looking for Equity NPS Funds, UTI Retirement Solutions and HDFC Pension Fund are performing better.

2) If you are looking for Govt Bonds NPS Funds, LIC Pension fund and SBI Pension Funds are doing good.

3) If you are looking for Corp Debt Plan NPS Funds, ICICI Pension Fund and Kotak Pension Fund are best.

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Suresh KP

Best NPS Funds in India that are rocking in 2019

The Author

Suresh KP

Suresh KP i.e. me have written 1,800+ articles on this blog. I have done by B.Com from Osmania University and then MBA-Finance from Symbiosis University, Pune. I have over 20 years of experience in analyzing various investment options and money saving ideas. I love doing financial planning, Mutual Fund Analysis, Searching long term Stocks for wealth creation, IPOs, reviewing Insurance Products, analysing Health insurance Plans etc.

8 Comments

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  1. In addition to what is said, age limit, now increased to 65 years.
    Please confirm
    regards
    venkatesan

    1. Hello Venkatesan, Yes the age limit is increased from 60 years to 65 years. However the maximum maturity age is 70 years. Here is the link of the govt notification. http://pib.nic.in/newsite/PrintRelease.aspx?relid=173147

  2. From the employee perspective, can tier II investment be made only in equities not in govt or corporate bonds?

    1. Hello Sampath, Young investors can go for “Aggressive life cycle” fund option where one can invest in equity for 75% of their investment and balance in debt option. However once a individual reaches 35 years, such %age reduces every year by 4% per year. It would slow down to 3% per year once individual reaches 45 years age. Here is nice article where more details available. https://timesofindia.indiatimes.com/business/faqs/pension-fund-faqs/pick-the-best-nps-funds/articleshow/58567386.cms

  3. can we get their portfolio holding companies?

    1. Hi Saurav, In this article, we have restricted only to performance in short to long term. We can enhance this in our future articles. However if you would like to see the holdings of a particular NPS fund, you can check at this link on websites like economic times. Here is one sample. https://economictimes.indiatimes.com/birla-sun-life-pension-scheme-scheme-e-tier-i/nps/schemecode-98.cms

  4. Your opinion on this investment is missing

    1. Hello Venu, My first line in this article is that NPS is best way to plan for retirement. I have already given my conclusion about who is the best fund manager (Last few paragraphs). Is this what you are looking or something else?

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