National Pension System: This fund gave more than 15% return in 1 year; check top performing NPS schemes in 2025

NPS returns: The stock market has been in the negative territory in recent months. Since September 27, 2024, both the Sensex and Nifty have experienced declines of more than 17% and 18%, respectively. This has resulted in many investors witnessing a reduction in their equity returns, with some experiencing negative returns.

According to the latest data from the Pension Fund Regulatory and Development Authority (PFRDA), the growth of assets under management (AUM) in the National Pension System (NPS) has slowed down to 20.3% year-on-year, reaching Rs 13.83 lakh crore as of March 1. This decrease in growth is attributed to the decline in equity benchmarks in the latter part of February, which has impacted overall market-linked returns. Of the total AUM of nearly Rs 14 lakh crore, around Rs 3 lakh crore has been invested in equity schemes.

By February 15, the overall AUM of NPS had reached Rs 13.90 lakh crore, showing a higher year-on-year growth rate of 22.2%. However, the market volatility in the latter part of the month has led to a slight decrease in asset value.

However, one NPS pension fund, DSP NPS Tier I equity scheme, has outperformed with returns exceeding 15.06% in Tier I equity over the past year, as of March 13, 2025. In comparison, other Tier I equity schemes within NPS have delivered significantly lower returns during the same period.

DSP NPS Tier I equity scheme

As per the information provided on the NPS Trust website, the Equity Tier I scheme offered by DSP has achieved a return of 15.06% in the previous year. In contrast, other NPS equity schemes have not been able to surpass a 5% return within the same timeframe. 

Specifically, the SBI NPS equity scheme reported a return of -2.12%, while Max Life yielded a return of 0.80%. UTI Pension Fund's equity scheme delivered a return of 4.63%, and Kotak Pension Fund's equity scheme achieved a return of 4.64% in the last year. Aditya Birla Equity Pension Fund, on the other hand, provided a 1.70% return in the same period.

Returns in 3 years

Investment approaches in NPS

> Active Choice: Investors have the flexibility to allocate their contributions among Equity (E), Corporate Bonds (C), Government Securities (G), and Alternative Investments (A). 
> Equity investments are limited to 75% of the total contribution, while Corporate Bonds and Government Securities can receive up to 100% allocation. 
> Alternative Investments are capped at 5%.
> Auto Choice: This option adjusts asset allocation based on the investor's age. It starts with a higher equity exposure in younger years and gradually shifts towards safer assets like bonds and government securities as retirement approaches. Auto Choice is ideal for individuals who prefer a hands-off approach to investment management and prioritize risk aversion.

Private sector NPS 

Since its establishment in 2004, the National Pension System (NPS) has experienced continuous expansion, fueled by a rise in participation from both government and private sector workers.

As of March 1, private sector NPS assets increased by 24.56% year-on-year to ₹2.75 lakh crore. This growth rate was slightly lower than the 28% increase recorded on February 15 when the assets reached ₹2.78 lakh crore.

Comparing the growth rates between March 2020 and March 2024, private sector NPS showed a significant increase of 25%, while the government sector only grew by 8%.

Private sector employees have shown a strong interest in NPS, leading to robust growth in assets under management (AUM). Private sector AUM grew by 25%, outpacing the 19% growth seen in the government sector. Despite this, the government sector holds a much larger AUM of ₹10.6 lakh crore in absolute terms.

Recent market corrections have affected short-term growth; however, the long-term expansion of the NPS continues to display resilience. This growth is driven by the growing financial literacy among individuals and a rise in voluntary participation from private sector employees and self-employed individuals.