Active vs Auto Choice in NPS
Understand the two investment approaches in NPS — choose your own allocation (Active) or let it adjust automatically with age (Auto/Lifecycle Funds).
Active Choice — You Decide the Allocation
In Active Choice, you decide how your NPS contributions are allocated across the four asset classes. This gives you full control over your investment strategy.
- Equity (E): Maximum 75% allocation. This cap reduces by 2.5% per year after age 50 (75% at 50, 72.5% at 51, ... 50% at 60).
- Corporate Bonds (C): Up to 100% allocation.
- Government Securities (G): Up to 100% allocation.
Rebalancing: You can change your asset allocation once per financial year. The total of E + C + G must equal 100%. If you do not rebalance, your allocation remains as previously set (subject to the age-based equity cap).
Auto Choice — Lifecycle Funds
Auto Choice uses lifecycle funds that automatically adjust your asset allocation based on your age. Equity exposure starts high and gradually shifts to safer assets (bonds, govt securities) as you approach retirement.
| Lifecycle Fund | Max Equity | Equity Reduction Starts | Equity at 55 | Best For |
|---|---|---|---|---|
| LC-75 (Aggressive) | 75% | Age 36 | 15% | Young investors with high risk appetite |
| LC-50 (Moderate) | 50% | Age 36 | 10% | Default option; balanced risk |
| LC-25 (Conservative) | 25% | Age 36 | 5% | Risk-averse investors |
| BLC (Balanced) | 50% | Age 45 | 30% | Longer equity exposure; new option |
If you do not choose a lifecycle fund, LC-50 (Moderate) is assigned by default.
Balanced Lifecycle Fund (BLC) — The New Option
The Balanced Lifecycle Fund was introduced by PFRDA in October 2024 to address a common criticism of existing lifecycle funds — that they reduce equity too early.
- Equity stays at 50% until age 45 (vs age 35 for LC-50), giving you nearly a decade more of equity exposure.
- Glide path: Equity reduces from 50% at age 45 to 20% at age 55 and further to 10% by age 60.
- Govt employees: Extended to central and state government employees in October 2025.
- Why it matters: For someone who joins NPS at 25, LC-50 starts reducing equity at 36 — when the subscriber still has 24 years to retirement. BLC addresses this by maintaining equity allocation for longer.
Comparison example (subscriber joins at 25): In LC-50, equity exposure drops from 50% to 35% by age 40. In BLC, equity stays at 50% until age 45. Over 20 years, this extra equity exposure can lead to a meaningfully larger corpus.
Which Should You Choose?
| Profile | Recommended Choice | Why |
|---|---|---|
| Under 35, comfortable with markets | Active Choice (75% equity) | Maximum equity for longest compounding period |
| Under 35, prefer hands-off | Auto — BLC or LC-75 | High equity with automatic age-based reduction |
| 35-45, moderate risk | Auto — BLC | Maintains 50% equity till 45, balanced approach |
| 45-55, conservative | Auto — LC-50 or LC-25 | Lower equity as retirement approaches |
| Any age, active investor | Active Choice | Full control over asset allocation |
Key point: There is no “best” choice — it depends on your age, risk tolerance, and willingness to manage your allocation. Active Choice offers control but requires annual review. Auto Choice is truly set-and-forget.
Frequently Asked Questions
Can I switch between Active and Auto Choice?
Yes. You can switch between Active Choice and Auto Choice (or between lifecycle funds within Auto Choice) once per financial year. The switch takes effect from the next valuation day. There is no charge for switching, but frequent changes are not recommended as they disrupt your long-term investment strategy.
What happens to equity allocation after age 50 in Active Choice?
In Active Choice, the maximum equity allocation of 75% reduces by 2.5 percentage points each year after age 50. By age 60, the maximum allowed equity is 50%. This auto-reduction applies even if you chose Active Choice — it is a regulatory cap. You can voluntarily hold less equity, but not more than the age-based cap.
Which lifecycle fund should I choose if I am 30 years old?
For a 30-year-old with moderate-to-high risk appetite, LC-75 (Aggressive) or the new Balanced Lifecycle Fund (BLC) are good options. LC-75 starts with 75% equity and reduces early (from age 36). BLC maintains 50% equity until age 45, providing longer equity exposure. If you prefer a hands-off approach with balanced risk, LC-50 is the default and a solid choice.
Is the Balanced Lifecycle Fund available for government employees?
Yes. The BLC was initially launched in October 2024 for non-government subscribers. In October 2025, PFRDA extended it to central and state government employees as well. Government employees can now choose BLC as their Auto Choice lifecycle fund.
Disclaimer: NPS investment choices and lifecycle fund structures are governed by PFRDA regulations. Equity caps and glide paths may be revised. Past performance does not guarantee future returns. Consult a financial advisor for personalized investment advice.
