NPS subscribers get a new tool to compare pension funds; here's how it works

National Pension System (NPS) subscribers can now compare the historical performance of pension funds before choosing or switching a fund manager, with the Pension Fund Regulatory and Development Authority (PFRDA) launching its new digital tool, NPS PRIDE-DISHA.

What is NPS PRIDE-DISHA?

PFRDA has launched NPS PRIDE-DISHA (Pension Fund Returns for Informed Decision & Empowerment), a subscriber awareness and decision-support digital toolkit designed to help NPS subscribers make more informed investment decisions.

Why has PFRDA introduced the tool?

PFRDA said NPS subscribers have traditionally assessed pension funds based on point-to-point returns of individual schemes such as Equity (E), Corporate Bonds (C) and Government Securities (G). However, these metrics may not accurately reflect the investment experience of subscribers who make regular contributions over a long period. Since subscribers invest across different asset classes in a defined proportion, the regulator said there was a need for a more meaningful comparison tool.

How does NPS PRIDE-DISHA work?

The tool uses historical scheme-wise NAV data since 2008 and applies the Extended Internal Rate of Return (XIRR) methodology to assess pension fund performance from a subscriber's perspective. PFRDA clarified that the tool is based entirely on historical NAV data and does not provide future projections or assumption-based estimates.

Key features of NPS PRIDE-DISHA

The regulator said the online tool is built using nearly 5,000 days of historical NAV data and offers nearly 4,800 combinations of investment choices based on around 1.10 lakh NAV data sets.

-Return calculation using the XIRR methodology.

• Evaluation of historical performance based on subscriber-specific parameters such as age, investment commencement date, contribution amount and investment choice.

• Support for Composite Schemes, Active Choice and Auto Choice investment options.

• Like-for-like comparison across pension funds that were operational during the selected period.

• Simulation of retirement wealth accumulation under different pension funds and investment choices.

• Performance outcomes displayed through an easy-to-understand bar graph format.

How can subscribers access the tool?

To use the tool, subscribers need to enter their month and year of birth, investment start date and monthly contribution amount.

PFRDA said it plans to expand the toolkit by adding features such as Tier II returns, NPS Vatsalya schemes, MSF schemes, and rolling and trailing returns for different investment choices.