29-04-2025
Choosing the Right NPS Fund Manager: Insights from Subhasis Ghosh
When it comes to retirement planning, flexibility and control are often underrated. With the National Pension System (NPS), not only can you choose how much and how often you invest, but you also have the power to select who manages your money.
In Episode 7 of 'NPS Made Simple: Your Pension Partner for Life', Subhasis Ghosh, CEO of Kotak Mahindra Pension Fund, helps demystify a key decision-making point: How to choose the right Pension Fund Manager (PFM)?
Through the case of Vinay, 42, who is reviewing his portfolio and wondering whether to switch PFMs, the episode explores how fund managers in NPS work, what investors should look for, and why this choice matters for long-term wealth creation.
Who are the authorized Pension Fund Managers (PFMs) under NPS?
All PFMs operating under NPS are approved by PFRDA (Pension Fund Regulatory and Development Authority). The criteria for selection are stringent, covering financial strength, experience, and regulatory compliance. Currently, only 10 PFMs are authorized to manage NPS funds in India. They've all passed a tough filter, and many have over five years of consistent performance to showcase . You can view their track records and fund-specific data on the NPS Trust website, which regularly updates performance by asset class.
Yes. Every PFM is authorized to manage all four asset classes under NPS: E – Equity
C – Corporate Bonds
G – Government Securities
A – Alternate Assets
This means that you can have one PFM managing all your investments, or you can split them up based on performance. For instance, a subscriber can choose one PFM to manage equity exposure and another to manage government securities.
You can allocate different PFMs for Tier I and Tier II accounts as well, giving you access to up to six different PFMs if you want to tailor it that way,' Ghosh explains.
Absolutely. NPS allows you to switch your PFM once every financial year. This gives subscribers the freedom to pivot based on performance or preference—something most traditional pension plans do not offer.
This switch is free of cost, and there is no tax implication for reallocating assets between PFMs or across asset classes, unlike mutual funds or FDs, where such moves may incur exit loads or capital gains tax.
This is where it gets interesting. Should you choose a fund house based on its brand? Its track record in mutual funds? Or stick to the performance data? All 10 PFMs are reputable and monitored. What separates them is their performance history—how they've managed returns across equity and debt, consistently, over the years.
Long-term returns across PFMs are publicly available. Look at the 7-year or 10-year CAGR (Compound Annual Growth Rate) across asset classes, and how stable the fund has been in both bull and bear markets.
This flexibility is valuable not just for seasoned investors but for anyone serious about retirement. In fact, with volatility in equity and debt markets, being able to course-correct annually by switching PFMs or tweaking asset allocation is a strategic advantage. Don't get swayed by one-year highs. Look for fund managers with long-term discipline and patience. After all, NPS is a retirement vehicle—it's not about short-term wins.'
One word: Patience. Ghosh emphasizes that the goal of an NPS fund manager should be to generate sustainable returns over decades, not to chase immediate spikes. This isn't about reacting to every market movement. It's about building stability for your 60s, 70s, and beyond.'
To ensure safety, NPS equity investments are limited to the top 200 companies by market capitalization, keeping the risk profile lower than mid- or small-cap-heavy funds.
NPS isn't just about where your money goes—it's also about who helps it grow. With the freedom to choose (and change) your Pension Fund Manager, subscribers can stay agile without sacrificing stability.
Make use of the data, review your portfolio every year, and don't hesitate to shift if needed,' Ghosh advises. 'The system is designed to empower you.'
First Published: 29 Apr 2025, 06:03 PM IST
