NPS update explained: What the govt’s new investment options mean for employees of central autonomous bodies

The Centre has expanded investment choices under the National Pension System (NPS) by extending two additional life-cycle funds to employees of central autonomous bodies (CABs) covered under the retirement scheme. The move, announced by the Finance Ministry on Tuesday, is aimed at giving subscribers greater flexibility to align their pension investments with their risk appetite and long-term financial goals. 

What has the government announced? 

The Finance Ministry has extended to employees of central autonomous bodies the same additional NPS investment options that were earlier made available to central government employees. The decision has been implemented through the Department of Expenditure by extending the applicability of the Department of Financial Services' notification dated November 13, 2025. 

With this change, eligible CAB employees will now have access to a wider range of investment choices under the NPS, allowing them to customise their retirement portfolio according to their financial preferences. 

What are the new investment options? 

One of the newly available options is LC-75 High, which was earlier known as the Aggressive Life Cycle Fund (LC-75). This fund allows equity exposure of up to 75% and is intended for subscribers who are comfortable taking on higher market risk in pursuit of potentially higher long-term returns. 

The second option is the Aggressive Life Cycle Fund, which replaces the earlier Balanced Life Cycle Fund (BLC). Under this option, equity exposure is capped at 50%, with the allocation to equities gradually reducing after the subscriber reaches the age of 45. The structure is designed to balance growth potential with portfolio stability as retirement approaches. 

Why has the government made this change? 

According to the Finance Ministry, the objective is to provide greater flexibility to NPS subscribers in central autonomous bodies. By offering additional investment choices, the government wants employees to be able to select a pension investment strategy that matches their individual risk appetite, financial objectives and retirement planning needs. 

The ministry believes the move will strengthen subscriber choice and make the National Pension System more attractive for employees covered under the retirement scheme. 

Who will benefit from the decision? 

The new investment choices will be available to employees of central autonomous bodies that are covered under the NPS. Earlier, these options were limited to central government employees under NPS. The latest notification brings CAB employees on par by giving them access to the same investment alternatives. 

How are the two options different? 

The primary difference lies in the level of equity exposure. LC-75 High is meant for investors who are willing to accept higher volatility in exchange for the possibility of stronger long-term returns, as it permits equity investments of up to 75%. 

In contrast, the Aggressive Life Cycle Fund follows a relatively balanced approach by limiting equity exposure to 50%. It also automatically reduces equity allocation from the age of 45, making the portfolio progressively more conservative as retirement nears. 

What does this mean for NPS subscribers? 

The decision gives eligible NPS subscribers greater control over how their retirement corpus is invested. Employees who have a higher risk appetite can opt for the equity-heavy LC-75 High fund, while those seeking a more balanced investment strategy can choose the Aggressive Life Cycle Fund. 

The ministry has also directed administrative ministries and departments to inform the central autonomous bodies under their control about the availability of these new investment options so that eligible employees can make informed investment decisions.