What is Annuity Rate in NPS?
NPS
Jan 17, 2025
LIC Pension Fund runs one of the most conservative books in NPS. Its regular Tier I E, C and G schemes hold about ₹21,400 crore, with the largest share in government bonds.
That caution shows in the results. LIC has the best long-term government bond record in NPS, a below-average equity record, and a safe but low-returning corporate bond scheme.
At a glance
| Scheme (Tier I) | Assets | 3-year return (rank) | 5-year return (rank) | 10-year return (rank) |
|---|---|---|---|---|
| Scheme E (equity) | ₹7,418 crore | 7.09% (7 of 9) | 8.05% (6 of 7) | 10.85% (5 of 6) |
| Scheme C (corporate bonds) | ₹4,655 crore | 7.23% (9 of 9) | 6.20% (7 of 7) | 7.42% (4 of 6) |
| Scheme G (government bonds) | ₹9,370 crore | 6.46% (2 of 9 (tied)) | 5.81% (3 of 7) | 7.63% (1 of 6) |
Returns for Tier I as on 18 September 2026; assets from Value Research, October 2026. Rank is among funds with a record for that period.
Scheme G (government bonds)
| Period | LIC | Benchmark | Average of all funds | Rank |
|---|---|---|---|---|
| 1 year | 3.14% | 3.43% | 2.93% | 2 of 10 (tied) |
| 3 years | 6.46% | 6.75% | 6.25% | 2 of 9 (tied) |
| 5 years | 5.81% | 5.90% | 5.73% | 3 of 7 |
| 7 years | 6.68% | 6.41% | 6.55% | 2 of 7 |
| 10 years | 7.63% | 6.86% | 7.07% | 1 of 6 |
| Since inception | 9.05% | – | – | – |
This is LIC’s standout scheme. Its 10-year return of 7.63% is the best of all ten funds, 0.54 percentage points ahead of SBI in second place. Over 10 years, ₹1 lakh grew to about ₹2.09 lakh. Since inception in 2013, the scheme has returned 9.05% a year, also the highest.
It ranks second over 7 years and joint second over 3 years. The portfolio is the most sovereign of the ten, at 96.51%. It is also the least concentrated: the largest holding, a 7.34% government bond maturing in 2064, is 8.19% of the fund.
Scheme E (equity)
| Period | LIC | Benchmark | Average of all funds | Rank |
|---|---|---|---|---|
| 1 year | -6.04% | -3.95% | -5.09% | 6 of 10 (tied) |
| 3 years | 7.09% | 8.56% | 8.10% | 7 of 9 |
| 5 years | 8.05% | 8.76% | 8.44% | 6 of 7 |
| 7 years | 13.09% | 14.05% | 13.42% | 6 of 7 |
| 10 years | 10.85% | 12.37% | 11.55% | 5 of 6 |
| Since inception | 11.75% | – | – | – |
LIC’s equity record is below average. It ranks seventh of nine over 3 years, sixth of seven over 5 and 7 years, and fifth of six over 10 years. Its 10-year return of 10.85% is 1.52 percentage points a year below the benchmark.
The portfolio is close to fully invested, at 98.34% equity. Its top holdings are ICICI Bank (6.96%), HDFC Bank (6.03%), Reliance Industries (5.06%), State Bank of India (4.29%), Bharti Airtel (4.24%) and Larsen & Toubro (4.05%). Financial stocks are 31.76% of the portfolio, and energy and utilities 12.57%.
Scheme C (corporate bonds)
| Period | LIC | Benchmark | Average of all funds | Rank |
|---|---|---|---|---|
| 1 year | 4.88% | 4.90% | 5.26% | 9 of 10 |
| 3 years | 7.23% | 7.05% | 7.50% | 9 of 9 |
| 5 years | 6.20% | 6.19% | 6.43% | 7 of 7 |
| 7 years | 7.24% | 7.48% | 7.33% | 6 of 7 |
| 10 years | 7.42% | 7.59% | 7.52% | 4 of 6 |
| Since inception | 8.65% | – | – | – |
LIC holds one of the safest corporate bond portfolios: 86.43% AAA-rated and only 8.67% AA-rated. Only Aditya Birla Sun Life has a higher AAA share. Its largest holdings are bonds of public-sector issuers such as HUDCO, NHPC, the National Highways Authority and Power Grid.
The trade-off is return. LIC ranks last of nine over 3 years and last of seven over 5 years. Over 10 years it does better, fourth of six, but still below the benchmark.
MSF schemes
| Scheme (as listed by NPS Trust) | Equity range | Assets (₹ crore) |
|---|---|---|
| Growth Plus – Tier I | 0%-100% | 13.62 |
| Smart Balance – Tier I | 65%-85% | 11.70 |
NPS Trust, as on 30 September 2026.
Growth Plus can hold anything from 0% to 100% in equity. Smart Balance is a balanced scheme with 65% to 85%. Together they hold ₹25 crore. See the MSF comparison.
Fees
From 1 April 2026, the investment management fee on regular non-government NPS schemes is slab-based: 0.12% a year on the first ₹25,000 crore of assets, then 0.08%, 0.06% and 0.04% on higher slabs. MSF schemes can charge up to 0.30%.
Verdict
- Scheme G: the best 10-year record of all ten funds, by a clear margin.
- Scheme E: below average over every long period.
- Scheme C: the safest credit mix, with returns to match.
- Active choice: a strong pick for Scheme G. For equity, ICICI Prudential, HDFC, Kotak and UTI have better records. You can hold up to three pension funds, one per asset class.
- Auto choice: LIC suits subscribers in their 50s, when government bonds are most of the account. For a younger subscriber, the equity record matters more.
Compare it with the rest in the Scheme G, Scheme E and Scheme C comparisons.
Sources: returns for Tier I as on 18 September 2026, NPS Trust data as published by HDFC Securities. Net assets and portfolios: Value Research, October 2026. MSF schemes: NPS Trust. Fees: PFRDA. Past returns do not guarantee future returns.
