In a move to enhance retirement planning flexibility, the Government of India has approved the introduction of Life Cycle 75 (LC75) and Balanced Life Cycle (BLC) investment options for Central Government employees under both the National Pension System (NPS) and the Unified Pension Scheme (UPS).
Announced by the Ministry of Finance, this decision expands the investment choices available to government employees, enabling higher participation in equities and greater alignment with individual financial goals and risk preferences.
Expanded Investment Options
The newly approved framework allows Central Government employees to choose from a broader range of life cycle-based investment models designed by the Pension Fund Regulatory and Development Authority (PFRDA). These include:
- Default investment pattern
- Scheme G (100% government securities)
- LC25, LC50, LC75, and the newly added Balanced Life Cycle (BLC) model
Under LC75, subscribers can now have up to 75% equity exposure, gradually tapering from age 35 to 55.
The LC50 and LC25 models cap equity exposure at 50% and 25%, respectively.
The BLC model, a variant of LC50, maintains higher equity exposure until age 45, allowing longer participation in equities for potentially better long-term returns.
Smarter Pension Planning with Greater Flexibility
According to the Ministry of Finance, these enhancements aim to provide a more flexible and growth-oriented approach to retirement planning.
Each life cycle fund follows a “glide path” — a mechanism that automatically reduces equity exposure with age, shifting gradually toward debt instruments. This helps safeguard the retirement corpus from market volatility as employees approach retirement.
Through these options, employees can now tailor their pension portfolios with an optimal mix of government securities, corporate bonds, and equities that automatically rebalance over time.
Structured Asset Allocation Matrix
Under the PFRDA framework:
- LC75: Starts with 75% equity exposure at age 35, reducing to 15% by age 55
- LC50: Starts at 50%, tapering down similarly
- LC25: Starts at 25%, with proportionate reduction
- BLC: Retains higher equity exposure until mid-career (around age 45) before gradually rebalancing toward fixed-income assets
This systematic tapering ensures a balance between growth potential and capital protection, supporting a stable and sustainable retirement corpus.
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