My NPS Wishlist: More Flexibility, More Growth 📈

This is the 4th article in my NPS series. In this one, I’m sharing some ideas to make NPS even more investor-friendly.

1️⃣ 100% Equity Allocation
As a young investor, I’d like the option to allocate my entire corpus to equity until I’m 5 years away from retirement.

2️⃣ Beyond the Top 200 Companies
Fund managers should have the flexibility to invest beyond the top 200 Indian companies. In my younger years, I’m comfortable with higher risk and would love exposure to smallcaps and even microcaps.

3️⃣ Global & Commodity Exposure
NPS should offer options to invest in commodities like gold & silver, and also in global markets - US, China, Brazil, and other emerging territories.

4️⃣ Higher Allocation to Scheme A
The current 5% cap on Scheme A feels restrictive. Subscribers should be allowed to allocate a higher portion here.

5️⃣ Flexible Annuity Options
Subscribers should be able to choose more than one annuity service provider during exit, with the ability to set different payout frequencies (monthly, quarterly, yearly) for each annuity. They should also have the option for inflation-adjusted annuities.

6️⃣ Transfer Funds from EPF to NPS
In 2015, the then Finance Minister Arun Jaitley proposed allowing EPF balances to be transferred to NPS. Although some rules were introduced, the process remains unclear. Having to route the application through an employer creates an unnecessary obstacle for employees. Additionally, there is a lack of clarity regarding the treatment of the EPS balance, and so far, there has been no significant progress on this initiative. Even the EPFO FAQ (No. 412) says that there is currently no provision to make this transfer.

💭 Closing Thoughts
The National Pension System has come a long way, but there’s still room for improvement. With greater flexibility, NPS could evolve into a truly world-class retirement instrument. For young investors like me, these enhancements would make it an even more effective wealth-building tool.