Big news for central employees: There’s significant news for central government employees. The Finance Ministry has approved two new investment options—”Life Cycle” and “Balanced Life Cycle”—under the National Pension System (NPS) and the Unified Pension Scheme (UPS). This decision will allow employees to manage their retirement funds according to their preferences and risk appetite.
Central government employees had long demanded that they be provided with more investment options under the NPS and UPS, similar to those available to non-government employees. This demand has now been fulfilled, providing employees with new opportunities for their retirement funds.
Features of the New Options
Employees will now be able to choose from various investment options under the NPS and UPS. Previously, there was only one default option, which followed the investment pattern set by the Pension Fund Regulatory and Development Authority (PFRDA). Additionally, Scheme G was also available, which offered 100% investment in government securities for low risk and guaranteed returns.
NPS was launched in 2004, while UPS was also approved the same year. UPS received broader approval from April 2025 and now offers employees better investment options.
Life Cycle Option: Balanced Investments by Age
The Life Cycle Option aims to provide employees with safe and profitable investment options based on their age and investment horizon. The LC-25 option has a maximum equity allocation of 25 percent, which gradually decreases from age 35 to age 55. This means that as employees approach retirement, their investments shift to safer instruments.
The LC-50 option has a maximum equity allocation of up to 50 percent. Balanced Life Cycle (BLC) is a modified version of LC-50, in which equity allocation begins to decrease from age 45 to allow employees to stay invested in equities for a longer period. Meanwhile, the LC-75 option has a maximum equity allocation of 75 percent, which gradually decreases from age 35 to 55.
Benefits for Employees
Experts say these new options will provide government employees with greater flexibility and the opportunity to better tailor their pension plans. They will now be able to choose investments based on their financial priorities and risk tolerance.
This government initiative is an important step towards securing employees’ financial future and ensuring balanced long-term investments. Options like Life Cycle and Balanced Life Cycle will not only increase investment diversity but also help manage pension fund risk.
This change is expected to enable government employees to better manage their retirement funds and ensure financial security. This move will meet a long-standing demand and strengthen employees’ financial stability.