How to Switch NPS Fund Manager Based on Long-Term Performance?
The National Pension System (NPS) is a crucial tool for retirement savings in India, providing a structured way to secure your financial future. However, to maximise returns, it's essential to monitor the performance of your fund manager and be open to switching if necessary. In this blog, we'll understand the importance of choosing the right Pension Fund Manager (PFM) and provide a step-by-step guide on how to switch to improve your retirement savings.
Understanding NPS and Fund Managers
The National Pension System (NPS) is a voluntary, defined-contribution retirement scheme promoted by the Indian government. It allows citizens to invest periodically during their working life to build a corpus for a financially secure retirement. The scheme is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). Under NPS, individual savings are pooled into a pension fund and invested by PFRDA-regulated professional fund managers into diversified portfolios.
Pension Fund Managers (PFMs) play a vital role in managing investments within NPS. These managers invest pooled funds into various asset classes, such as equities, government bonds, corporate debentures and alternate investment funds (AIFs) to generate returns. The performance of these PFMs directly impacts the growth of your retirement corpus.
Why Consider Switching Your NPS Fund Manager?
Switching your NPS fund manager might be necessary under certain circumstances:
- Performance Evaluation: It's crucial to evaluate the long-term performance metrics of your PFM. If your fund manager consistently underperforms compared to its peers, it may be time to consider a switch.
- Market Changes: Changing market conditions can impact fund performance. A fund manager that performed well in the past may not be as effective in a new economic environment.
- Change of Scheme Preference: PFRDA allows subscribers to change their Pension fund manager preference once a year.
Factors to Consider Before Making the Switch
Before switching your NPS Fund Manager, consider the following factors:
- Analyse Past Performance Data: Examine the historical performance of potential PFMs. Look for consistent returns and compare them against benchmark indices.
- Investment Strategy: Understand the investment philosophy and strategy of different PFMs. Ensure their approach aligns with your risk tolerance and investment goals.
Switching NPS PFM
The PFRDA allows all subscribers to change their Pension Fund Manager once a year.
Steps to Switch Your NPS Fund Manager
Switching your NPS fund manager is a straightforward process that can be done online or offline:
Online Method:
- Log into Your NPS Account: Access your NPS account through the eNPS portal.
- Initiate the Switch: Login to Your NPS Account >Go to Make Transaction > Change PFM – Asset Class > Select Tier Type > Click on Submit > Select Scheme Preference > Generate OTP, Enter the OTP & Click Submit
- Confirm the Change: After submitting your request, expect an acknowledgment and allow processing time for the switch to take effect.
Offline Method:
- Visit a POP (Point of Presence): Visit your nearest UTI Pension Fund branch.
- Fill out the Form: Obtain and fill out Form-UOS-S3/CS-S3.
- Submit the Form: Submit the completed form to the POP for processing.
Conclusion
Taking control of your retirement savings involves making informed decisions about your fund managers. Regularly monitor their performance, consider market changes, and don't hesitate to switch if a different manager aligns better with your financial goals. By actively managing your NPS account, you can enhance your retirement savings and secure a comfortable financial future.
Visit your nearest UTI Pension Fund branch or www.utipension.com to open your NPS Account today. For more assistance get in touch with us at contact@utipf.co.in and our team will be happy to assist you at the earliest.