How to track NPS returns and rebalance your allocation

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Analysing NPS results

The National Pension System (NPS) is a government-sponsored retirement savings plan where you can invest in government bonds, corporate bonds, and stocks. Your returns are determined by the performance of the pension fund managers and the division of assets. Ongoing monitoring of returns keeps your portfolio aligned with your financial goal and risk tolerance.

How to check your NPS returns

To track NPS returns, you log in to Central Recordkeeping Agency (CRA) website, i.e., NSDL CRA or Karvy CRA, using your PRAN and password. Once you log in, you are able to view the account balance, the contributions, and the NAV of the schemes you have invested in. The website also displays the returns data of all the asset classes and your portfolio's overall performance.

Also, you may review returns through the NPS mobile app or by accessing the annual transaction statement received in your registered email. You may compare your portfolio returns with the past performance of different pension fund managers and decide on any change.

Importance of rebalancing your portfolio

As conditions in the market shift, your NPS asset allocation will deviate from your target of equity, corporate bonds, and government securities. Rebalancing restores your portfolio to its target risk level and long-term goal. For example, if equities are increasing, your equity portion of your portfolio might be higher than your target. Through rebalancing, you can shift money to debt instruments, reducing risk.

How to rebalance your NPS portfolio

NPS permits you to switch your asset allocation and fund manager twice within a financial year. You can access the CRA portal and choose that you would like to make a change in your investment option. There are two choices: active choice, where you specify the precise percentage in each of the asset classes, and auto choice, where this is automatically done on the basis of age.

Rebalancing once or twice a year will be sufficient. Do not switch too often based on short-term market fluctuations. The goal is to be in the right mix of growth and stability and stay on track for retirement. Regular monitoring of returns and rebalancing keeps your NPS investment aligned with your retirement strategy while maximizing growth and minimizing risk.FAQs

Q1. How often should I check my NPS responses?

Reviewing your returns every quarter or at least twice a year is enough to maintain your portfolio in proper working condition as intended.

Q2. Can I switch pension fund manager if returns are poor?

Yes, you can switch your pension fund manager once a year if you are not happy with the performance.

Q3. Is there a fee to rebalance?

NPS imposes a small fee for a change in asset allocation or fund manager, but the fee is negligible compared to the potential advantage of improved returns and lower risk.