Economics · National Pension System (NPS) Governance
A State Government employee, who is a mandatory subscriber to the National Pension System (NPS), notices that their contributions are pre-allocated according to default government rules with limited equity exposure compared to the private sector. Which of the following explains the governance reason for this setup?
- 1The State Government has not yet fully adopted PFRDA rules, and the subscriber must convert their account to an 'All Citizen Model' to access any equity exposure.
- 2The contributions are temporarily held in an unallocated debt pool and are fully eligible for equity allocation only after 5 years of completed service.
- 3State Government employees are mandatorily placed in the Conservative Life Cycle Fund (LC25) as the only available option, regardless of age or subscription date.
- 4The investment choices for Government Sector subscribers have historically been governed by highly regulated, conservative default patterns prescribed by the government and PFRDA to minimize risk exposure to public pension funds.✓
Correct answer
The investment choices for Government Sector subscribers have historically been governed by highly regulated, conservative default patterns prescribed by the government and PFRDA to minimize risk exposure to public pension funds.
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