My National Pension Scheme Performance – Aug 2015

I have a mandatory National Pension Scheme account.  By way of information, I would like to post the performance of my three NPS mutual funds from time to time. I repeat, this is only for information only and not a recommendation.  Many government employees read freefincal.

If NPS is not mandatory for you, DO NOT SUBSCRIBE. It is a downright terrible product with severe restrictions on how much you can withdraw and poor taxation rules. Stick to good old EPF + PPF for debt.

Some people argue that the NPS corpus is tax-free for government employees. I would prefer to see official confirmation on this.

The details of the NPS mutual funds I hold are given here:

Performance of New Pension Scheme: Central Government Employee Subscription

All government employee schemes have 15% equity exposure. They can neither change the asset allocation nor change the fund manager!!

I have never logged into my NPS account due to a password issue (don't ask why I did not try and get a new password - I did!). Can someone tell me if they calculate XIRR (individual and net) for the scheme holdings?

You can also read other posts in this category to see why I do not recommend it: National Pension Scheme

In particular, Do Not Invest Rs. 50,000 in NPS For Saving Tax!

Click to enlarge.

NPS-returns-2015

 

Typo: The CAGR should be read as XIRR. When bonds crashed in July 2013, the XIRR dropped below 7% overnight!

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32 thoughts on “My National Pension Scheme Performance – Aug 2015

  1. B

    I recently opened my nps account and log in regurlry to check the retrns....the returns are astounding...least to say.......in my casr...50% each in C and G...tier 1 and 2 both xirr (the website directly shows it) is way above 15%.!!!!
    However the xirr is calculated on net amount invested..whic twists the results. any one else can pls share thir xirr along with breakup of c g e?

    Reply
    1. freefincal

      The catchword is "recently". Dont take your XIRR unless the account is at least an year old Preferably more. You can easily calculate individual XIRR yourself from the account statement.

      Reply
  2. B

    I recently opened my nps account and log in regurlry to check the retrns....the returns are astounding...least to say.......in my casr...50% each in C and G...tier 1 and 2 both xirr (the website directly shows it) is way above 15%.!!!!
    However the xirr is calculated on net amount invested..whic twists the results. any one else can pls share thir xirr along with breakup of c g e?

    Reply
    1. freefincal

      The catchword is "recently". Dont take your XIRR unless the account is at least an year old Preferably more. You can easily calculate individual XIRR yourself from the account statement.

      Reply
  3. Senthil Av

    If the employer is contributing to NPS over and above EPF .. We may consider investing in NPS .. XIRR of 10% combined with IT benefits during the year of contribution is pretty good ..

    Reply
    1. freefincal

      There is no IT benefit. You are simply deferring the tax liability to redemption. XIRR is 10% before tax (to be paid at slab upon redemption or annuity creation).

      Reply
  4. Senthil Av

    If the employer is contributing to NPS over and above EPF .. We may consider investing in NPS .. XIRR of 10% combined with IT benefits during the year of contribution is pretty good ..

    Reply
    1. freefincal

      There is no IT benefit. You are simply deferring the tax liability to redemption. XIRR is 10% before tax (to be paid at slab upon redemption or annuity creation).

      Reply
  5. Akhilesh

    The new account statement shows the XIRR since the date of account opening as well as for the last financial year. The contribution for the Government employees are not divided separately in C, G and E category but is distributed among three Pension Funds to be invested as per the PFRDA guidelines, where maximum investment in Equity is 15%.

    Reply
  6. Akhilesh

    The new account statement shows the XIRR since the date of account opening as well as for the last financial year. The contribution for the Government employees are not divided separately in C, G and E category but is distributed among three Pension Funds to be invested as per the PFRDA guidelines, where maximum investment in Equity is 15%.

    Reply
  7. SmartVP

    Pattu, Some how for my employee contributed NPS scheme I've been getting better XIRR consistently around 16 to 20% annualized returns since last 4 years. My NPS manager ICICI Pru and my allocation is 50% E and 50% C. Last FY I got XIRR 19.7%. I believe asset allocation scheme and Fund manager plays a major role in performance.

    Reply
    1. freefincal

      When did I say that they do not play a major role! The point is that you will need to pay tax as per slab for those equity returns. Had you invested separately ....

      Reply
  8. SmartVP

    Pattu, Some how for my employee contributed NPS scheme I've been getting better XIRR consistently around 16 to 20% annualized returns since last 4 years. My NPS manager ICICI Pru and my allocation is 50% E and 50% C. Last FY I got XIRR 19.7%. I believe asset allocation scheme and Fund manager plays a major role in performance.

    Reply
    1. freefincal

      When did I say that they do not play a major role! The point is that you will need to pay tax as per slab for those equity returns. Had you invested separately ....

      Reply
  9. SmartVP

    Agreed Pattu. At age 60, going by the present tax rules, indexation at 20% is applicable on the returns of around 20%. That translates to net 4% tax. In that case net XIRR is ~ 20%- 4% = 16% which is still attractive return over these many years.

    Reply
      1. SmartVP

        Pattu, As per Dhirendra Kumar of Value research NPS withdrawal returns after age 60 will be indexed > The tax outgo on the returns will be indexed:

        valueresearchonline.com/story/h2_storyView.asp?str=27406

        And one more write up in VR - the withdrawal amount, returns are taxed as per capital gains rules.(indexed)

        valueresearchonline.com/story/h2_storyView.asp?str=27930

        Reply
  10. SmartVP

    Agreed Pattu. At age 60, going by the present tax rules, indexation at 20% is applicable on the returns of around 20%. That translates to net 4% tax. In that case net XIRR is ~ 20%- 4% = 16% which is still attractive return over these many years.

    Reply
      1. SmartVP

        Pattu, As per Dhirendra Kumar of Value research NPS withdrawal returns after age 60 will be indexed > The tax outgo on the returns will be indexed:

        valueresearchonline.com/story/h2_storyView.asp?str=27406

        And one more write up in VR - the withdrawal amount, returns are taxed as per capital gains rules.(indexed)

        valueresearchonline.com/story/h2_storyView.asp?str=27930

        Reply

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