Tuesday, February 22, 2011

Performance of NPS - Returns on NPS from Jan 2010 to Dec 2010

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NPS fund managers had given good returns in the 1st year of its inception for general category. This was especially good considering that stock markets were not performing well because of recession. So, how was year 2010 for NPS fund managers? Were they able to give out good returns in 2010?
The performance of NPS fund managers was mixed and very varied. We have just collated returns for 3 of the fund managers. For Tier 1 category (Refer to our previous post of NPS to understand difference between Tier 1 and Tier 2 category), Reliance has given 24% return in 'E' category whereas UTI has given 15% return. In 'C' category, SBI has given 13% return whereas Reliance has given 6% return. In 'G' category, UTI has given 11% return whereas Reliance has given 7% return. Refer the table below for quick snapshot:

Fund E Category C Category G Category
SBI   16.47           13.30            10.36
UTI   15.66            8.83             11.27
REL   24.66           6.79               7.06

Similar snapshot for Tier 2 category is as below:

Fund E Category C Category G Category
SBI   13.51           14.62            14.42
UTI   16.76            6.78             15.21
REL   24.61           5.62               4.67

The difference in returns for various fund managers is because of asset allocation of different fund options.

In July 2010, the government has also announced NPS Lite for the economically deprived sections of the society. The scheme aims at building up a corpus sufficient enough to buy an annuity for their old age. Government's 'Swavalamban Scheme', which grants an incentive of Rs 1,000 to all eligible New Pension System (NPS) accounts shall be available to all NPS Lite account holders as well - The government would contribute Rs 1,000 annually to each NPS account opened in 2010-11.

NPS is still a good option to build retirement fund but banks prefer to promote their own products. The returns are much better than the traditional retirement or pension products like PPF etc.
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