NPS Scheme A Merges with C & E: What This Means for Your Retirement Portfolio

Table of Contents

• Introduction

• 1️⃣ What Has Changed?

• 2️⃣ Why the Change?

• 3️⃣ What Does This Mean for Investors?

  • ✅ Simplified Choice:

  • 📈 Potentially Higher Returns:

  • ⚖️ Moderate Risk Impact:

  • 🔍 Transparency & Tracking:

• 4️⃣ What Should You Do Now?

• 5️⃣ Finogent Insight

• Conclusion

Introduction

India’s National Pension System (NPS) just underwent a major change.
The Pension Fund Regulatory and Development Authority (PFRDA) has announced that Scheme A (Alternative Investments) will now be merged with Schemes C and E under Tier I’s Active Choice option.

This structural shift affects millions of investors who rely on NPS for retirement planning. The intent is to simplify fund choices, expand diversification, and enhance long-term performance through blended portfolios.

1️⃣ What Has Changed?

Previously, Tier I subscribers could allocate:

• Up to 5% in Scheme A (Alternative Investments)

• Up to 75% in Scheme E (Equity)

• The rest in Scheme C (Corporate Debt) and G (Government Securities).

With this merger, Scheme A’s limited exposure will now be integrated into Schemes C and E, meaning your portfolio automatically gains broader corporate and equity diversification without the “Alternative” label.

2️⃣ Why the Change?

According to PFRDA, this move is designed to:

• Simplify fund structure by removing a niche category many subscribers under-used.

• Increase transparency—alternative assets were harder for retail investors to evaluate.

• Improve risk-adjusted returns via better asset blending within mainstream classes.

• Align Tier I portfolios with global retirement-fund models that emphasize equity-debt balance over alternatives.

3️⃣ What Does This Mean for Investors?

✅ Simplified Choice:

No need to track a separate “Alternative” bucket. Future contributions will automatically allocate among C and E based on your chosen ratio.

📈 Potentially Higher Returns:

A portion of Scheme A’s alternative allocation (private debt, REITs, InvITs) will now be channelled through corporate and equity exposures that historically outperform pure alternatives over long horizons.

⚖️ Moderate Risk Impact:

Equity allocation may rise slightly for those earlier using Scheme A aggressively. However, because the exposure was capped at 5%, the change is evolutionary, not disruptive.

🔍 Transparency & Tracking:

NPS statements will now reflect only Schemes E, C, and G. Easier for subscribers to review fund performance.

4️⃣ What Should You Do Now?

1. Log in to CRA/NPS portal → check your new allocation ratio.

2. Re-assess risk profile: If you were maxed at 75% Equity (E), verify that new ratios still match your comfort level.

3. Consult your advisor: The merger may subtly shift returns; rebalance if needed.

4. Stay invested: NPS remains one of India’s most tax-efficient, inflation-beating retirement tools.

5️⃣ Finogent Insight

This is a positive regulatory evolution. By folding the smaller, illiquid Scheme A into mainstream categories, PFRDA is aligning NPS with modern pension-fund frameworks — easier management, better liquidity, and potentially higher compounded outcomes.

Long-term savers should use this moment to revisit overall retirement strategy, ensuring asset allocation across NPS, EPF, PPF, and mutual funds remains in sync.

Conclusion

The NPS Scheme A merger simplifies your retirement portfolio while preserving flexibility. Whether you’re a conservative saver or growth-focused investor, the message is clear — clarity and discipline now matter more than choice overload.

💡 Re-evaluate, rebalance, and stay invested for the next decade of compounding.

CTA: Need a personalised NPS and retirement allocation review? Connect with Finogent today.