If you are investing in the National Pension System (NPS), selecting the right fund manager is crucial for long-term wealth creation. With multiple Pension Fund Managers (PFMs) managing Tier-I equity plans, performance can vary significantly. Here’s a detailed look at the Top 3 NPS Fund Managers for 2025 based on consistent returns across 1-year, 3-year, 5-year, 7-year, and 10-year periods.
Investors can also read How to Maximise Returns from Systematic Withdrawl Plan (SWP).
What is NPS (National Pension System)?
The National Pension System (NPS) is a government-backed pension scheme designed to provide financial security to individuals post-retirement. It allows individuals to invest in a variety of asset classes, including equity, corporate bonds, and government securities. NPS is open to all Indian citizens, whether salaried or self-employed, and offers an opportunity to accumulate a retirement corpus while enjoying tax benefits.
How Does NPS Work?
NPS works by allowing investors to contribute regularly to their pension accounts, which are then managed by professional fund managers. The contributions are invested in different asset classes based on the investor’s choice or default options. NPS offers two types of accounts:
- Tier I Account: This is the mandatory account for all NPS investors. It is meant for long-term retirement savings and comes with certain withdrawal restrictions.
- Tier II Account: This is a voluntary account that allows investors to withdraw their funds at any time, offering more flexibility.
Investors can choose their fund manager from a list of authorized NPS fund managers, and their funds are invested according to the chosen asset allocation (equity, government bonds, or corporate bonds).
Why Consistency Matters in NPS Fund Performance
NPS is a retirement-focused product, where long-term performance plays a key role. A fund manager delivering stable and consistent returns across different market cycles is more reliable than one who performs sporadically. As an example there are 30 Mutual Funds that tripled investors money in 5 years. For this reason, we’ve evaluated fund managers with returns data spanning up to 10 years.
Top NPS Fund Managers Based on 2025 Performance
Based on the data as on 13-April-2025, here are the top NPS fund managers.
1) Kotak Pension Fund
Kotak Pension Fund has outperformed many of its peers across all time frames. It has consistently delivered strong returns, making it a reliable choice for long-term retirement planning.
- 1-Year Return: 2.45%
- 3-Year Return: 12.47%
- 5-Year Return: 22.80%
- 7-Year Return: 13.27%
- 10-Year Return: 11.62%
This consistent performance over the long term reflects Kotak’s strong equity management strategy. It is suitable for investors looking for long-term capital growth in their NPS portfolio.
2) UTI Pension Fund
UTI Pension Fund remains one of the top-performing fund managers under NPS Tier I equity plans.
- 1-Year Return: 1.70%
- 3-Year Return: 12.69%
- 5-Year Return: 22.83%
- 7-Year Return: 13.08%
- 10-Year Return: 11.62%
With returns nearly identical to Kotak over the long term, UTI is an excellent alternative for consistent growth. It stands out for maintaining stability through various market cycles.
3) HDFC Pension Fund
HDFC Pension Fund has steadily climbed the ranks due to its dependable performance.
- 1-Year Return: 0.49%
- 3-Year Return: 11.01%
- 5-Year Return: 21.61%
- 7-Year Return: 13.14%
- 10-Year Return: 11.62%
While its short-term returns are slightly lower than the top two, its long-term consistency makes it a strong contender in the NPS space.
Other Notable NPS Fund Managers
ICICI Prudential Pension Fund
- 1-Year Return: -0.01%
- 3-Year Return: 11.92%
- 5-Year Return: 22.75%
- 7-Year Return: 13.25%
- 10-Year Return: 11.36%
ICICI has shown good long-term returns but has slightly lagged in the recent 1-year performance.
LIC Pension Fund
- 1-Year Return: -0.59%
- 3-Year Return: 10.85%
- 5-Year Return: 22.36%
- 7-Year Return: 12.19%
- 10-Year Return: 10.51%
They have solid 10-year returns but are weaker in recent performance.
Tax Benefits of Investing in NPS
One of the major advantages of investing in the National Pension System (NPS) is the tax benefits it offers. Let’s break down the latest provisions under the Income Tax Act post Budget 2025, and highlight what’s allowed under old vs. new tax regime:
Section-wise NPS Tax Benefits
| Section | Deduction Limit | Applicable To | Allowed Under |
|---|---|---|---|
| 80CCD(1) | Up to ₹1.5 lakh (part of 80C/80CCE combined cap) | Salaried (10% of salary), Self-employed (20% of gross income) | ✅ Old Regime
❌ New Regime |
| 80CCD(1B) | Additional ₹50,000 (over and above 80C limit) | All individuals contributing to NPS | ✅ Old Regime
❌ New Regime |
| 80CCD(2) | Up to 14% of salary (Govt employee), 10% (Private); Budget 2025 increased private limit to 14% | Employer’s contribution to NPS for salaried individuals | ✅ Old Regime
✅ New Regime |
Who Should Invest in NPS?
The National Pension System (NPS) is a powerful tool for long-term retirement planning. It is ideal for individuals seeking stable returns, government oversight, and tax advantages (under the old regime). Here’s who should consider investing:
💸 1. Taxpayers Under the Old Regime
NPS continues to offer significant tax benefits under the old tax regime:
- ₹1.5 lakh deduction under 80CCD(1) (part of 80C)
- Additional ₹50,000 deduction under 80CCD(1B)
- Employer contribution (up to 14% of salary) deductible under 80CCD(2), even in the new regime
📝 Note: Tax benefits under 80CCD(1) and 80CCD(1B) are not available if you opt for the new tax regime (except 80CCD(2)).
🏦 2. Long-Term, Low-Cost Investors
If you’re looking for a low-cost, regulated, and disciplined savings plan for retirement, NPS fits perfectly. You commit for the long term, and partial withdrawals are allowed only under specific conditions, encouraging saving. However if you are looking for high returns, you can go for some of these Mutual Funds for Long Term investment in 2025.
👨👩👧 3. Parents Planning for Their Children
With the NPS Vatsalya Scheme introduced in Budget 2025, parents can now open NPS accounts for their minor children. Contributions made are eligible for tax deductions under 80CCD(1B), making it a smart way to plan for a child’s future retirement and reduce current tax liability.
🧓 4. Late Career Professionals Planning Retirement
Even those in their 40s and 50s can benefit from NPS to supplement other retirement investments. With the right allocation to equity and regular contributions, it can enhance your retirement corpus significantly.
Conclusion: If you’re looking for the best equity plan under NPS for 2025, Kotak Pension Fund, UTI Pension Fund, and HDFC Pension Fund are the top 3 performers offering consistency across multiple time frames. These funds have demonstrated their ability to navigate market volatility while delivering long-term returns, making them ideal for your retirement portfolio. Always evaluate your risk appetite and retirement goals before selecting a PFM. With consistent performers like these, your NPS investments are more likely to grow steadily over time.
FAQs
- How many pension fund managers are there in NPS Tier I equity plans?
As of now, there are 11 PFMs managing NPS Tier I equity plans. - Can I switch my fund manager under NPS?
Yes, NPS allows subscribers to switch fund managers once per financial year. - Is it better to choose active or auto choice in NPS?
If you’re confident about selecting a fund manager and asset allocation, active choice is better. Otherwise, auto choice provides automatic lifecycle-based allocation. - How do I evaluate which PFM is best for me?
Look for consistent long-term returns, fund size, and performance across multiple time frames. Also, check fund manager experience and credibility. - Are returns guaranteed in NPS?
No. NPS returns are market-linked and not guaranteed, especially in equity plans.
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Hi Sureh garu,
For old regime it is still 10% and for new regime it is 14% limit. Please confirm
Tax provisions and applicability are very clearly explained. Thanks.
important issue in 80CCD(2)
There is a 7.5L cap on what you can deduct in tax. if you exceed the cap, then it will be added your perquisite and become taxable.
• There is a maximum limit of Rs 7,50,000 on employer contribution to PF, NPS and Superannuation. Thus, any contribution by the employer over and above the limit of such excess amount will be considered as perquisite and taxable under section 17(2) of Income-tax Act.
Section 80CCD (2) (https://cleartax.in/s/taxability-on-nps-employers-contribution)
Since, this cap is from the section 80CCD(2), it is applicable for both regimes.