A major demand of central government employees has been fulfilled. The government has approved two new investment options – “Life Cycle” and “Balanced Life” – for central government employees under the National Pension System (NPS) and Unified Pension Scheme (UPS).
The Finance Ministry said that these options are designed to increase flexibility in retirement planning and allow employees to manage their retirement funds as per personal preferences. The decision fulfills the long-standing demand of central government employees, who had demanded that they be given more investment options under these pension schemes like non-government employees.
What are the two options?
Under NPS and UPS, central government employees can now choose from several investment options. One is the default option, which is the “default pattern” of investment defined by the Pension Fund Regulatory and Development Authority (PFRDA) from time to time. The other option is Scheme G, which invests 100% in government securities for low-risk, assured returns. While NPS was launched in 2004, UPS was approved by the central government in 2004. UPS was approved from April 2025.
What is included in the Life Cycle Option? The maximum equity allocation under
the Life Cycle (LC-25) option is 25%, which gradually decreases from the age of 35 to the age of 55. The maximum equity allocation under the LC-50 option is capped at 50% of the retirement corpus.
Similarly, the Balanced Life Cycle (BLC) option is a modified version of the LC50, in which the equity allocation decreases from the age of 45 to allow employees to invest in equity for a longer period. The LC75 option has a maximum equity allocation of 75 percent, which gradually decreases from the age of 35 to the age of 55.
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