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What Are The Best Performing NPS Schemes In 2025 That You Should Know?

Komal Bajpai

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Updated: 02-05-2025 at 3:31 PM

The National Pension System (NPS) represents an investment choice with high trust among Indian retirees since it offers both security and favourable returns for retirement planning needs. The selection of a suitable National Pension System scheme by investors determines how their long-term wealth will grow because of its many investment options and fund managers. This article examines the top NPS schemes of 2025, along with their return patterns and provides important selection criteria for building retirement security.

Overview

The below-mentioned table showcases the key insights of the best-performing NPS Schemes in India, with their fund type, Investment focus, risk profile, suitability and much more.

Fund Type	Investment Focus	Risk Profile	Suitable For
Equity Fund (E)	Up to 75% in equity	High	Young investors seeking high returns
Corporate Bond Fund (C)	Corporate debt instruments	Moderate	Mid-career individuals
Government Securities Fund (G)	Government bonds	Low	Conservative investors nearing retirement
Alternative Investment Fund (A)	Infrastructure, REITs, AIFs	High	High net worth individuals

What is the National Pension System (NPS)?

Under the supervision of the Pension Fund Regulatory and Development Authority (PFRDA) operates the National Pension System (NPS) operates as an optional programme for extended-term retirement savings. Through systematic investments, people can choose between Equity and Government Bonds and Corporate Bonds, and Alternatives to create retirement savings. Investors who retire can take a lump sum distribution, followed by allocating their remaining funds to purchase an annuity plan.

Best Performing NPS Tier-I Schemes in 2025

Here’s a detailed look at the top NPS Tier-I fund managers and their returns as of April 2025:

Pension Fund Manager	Fund Type	1-Year Return	3-Year Return (CAGR)	5-Year Return (CAGR)	Since Inception
HDFC Pension Fund	Equity	29.7%	16.5%	14.8%	14.5%
ICICI Prudential Pension Fund	Corporate Bond	9.2%	8.6%	8.9%	9.1%
LIC Pension Fund	Government Securities	7.5%	7.0%	7.2%	7.3%
SBI Pension Fund	Corporate Bond	9.5%	8.9%	9.0%	9.3%
Kotak Pension Fund	Equity	28.5%	16.0%	14.3%	14.2%
UTI Retirement Solutions	Government Securities	7.4%	7.2%	7.3%	7.1%

Note: Returns are subject to market risk. Past performance does not guarantee future returns.

Also Read: Delving Into The Differences Between OPS, NPS, & The New UPS

Best Performing NPS Tier-II Schemes in 2025

Tier-II NPS accounts offer flexible withdrawals without tax benefits. Here's a glance at Tier-II top performers:

Pension Fund Manager	Fund Type	1-Year Return	3-Year Return (CAGR)	5-Year Return (CAGR)
HDFC Pension Fund	Equity	30.2%	17.1%	15.0%
ICICI Prudential Pension Fund	Corporate Bond	9.0%	8.7%	9.1%
SBI Pension Fund	Government Securities	7.2%	7.0%	7.1%

Factors To Consider While Choosing An NPS Scheme

For NPS scheme selection, you need to consider these important points.

Age and Risk Appetite: The investment strategy based on age should include younger people allocating money to equity, while older individuals should move into debt instruments.
Fund Manager Track Record: A reliable indicator to select an NPS scheme consists of a fund manager who demonstrates steady return performance over multiple time periods.
Asset Allocation Strategy: Users should select an asset allocation strategy through Auto-choice (Life Cycle Funds) or Active Choice according to their financial needs.
Fees: The New Pension System maintains low costs because its fund management fees are currently limited to 0.09% annually.
Investment Horizon: A longer investment period provides two advantages by increasing compound effect while decreasing exposure to market fluctuations.

Latest Changes In NPS 2025 You Must Know

In recent years, NPS has undergone major changes and updates, such as Tax benefits, increased equity exposure and much more:-

E-E-E Tax Benefit: The National Pension Scheme provides tax-exempt benefits with E-E-E status, which enables partial taxpayer freedom for withdrawals.
Increased Equity Exposure: Investors under Active Choice have the option to invest their funds in equity instruments at levels reaching 75% before age 50.
Partial Withdrawals: Across the first three years of the NPS, the subscriber may request withdrawals amounting to 25% for essential needs, including education, marriage or purchasing real estate.

Also Read: Now NPS Employees Can Opt For Unified Pension Scheme 2025

Conclusion

National Pension System serves as an appealing financial vehicle which helps individuals develop retirement funds while achieving retirement security. A strategic combination of choosing smart fund managers with proper asset allocation plans allows you to achieve maximum returns along with manageable risk levels. Cheque investment performance often to modifying your portfolio when personal objectives change. Proper investment discipline will transform the NPS into your main retirement financial support mechanism.

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