What is Tier 2 NPS?
NPS
Jan 11, 2025
Kotak Mahindra Pension Fund is one of the original NPS pension funds, running money since 2009. It is small, with about ₹9,300 crore in its regular Tier I E, C and G schemes.
Its record is lopsided. Kotak is among the best in equity over the long run and the weakest of all ten funds in government bonds.
At a glance
| Scheme (Tier I) | Assets | 3-year return (rank) | 5-year return (rank) | 10-year return (rank) |
|---|---|---|---|---|
| Scheme E (equity) | ₹4,609 crore | 8.34% (4 of 9) | 8.86% (2 of 7) | 11.90% (3 of 6) |
| Scheme C (corporate bonds) | ₹1,804 crore | 7.66% (2 of 9) | 6.44% (4 of 7) | 7.23% (6 of 6) |
| Scheme G (government bonds) | ₹2,923 crore | 5.85% (9 of 9) | 5.48% (7 of 7) | 6.87% (6 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 E (equity)
| Period | Kotak | Benchmark | Average of all funds | Rank |
|---|---|---|---|---|
| 1 year | -6.04% | -3.95% | -5.09% | 6 of 10 (tied) |
| 3 years | 8.34% | 8.56% | 8.10% | 4 of 9 |
| 5 years | 8.86% | 8.76% | 8.44% | 2 of 7 |
| 7 years | 13.85% | 14.05% | 13.42% | 2 of 7 |
| 10 years | 11.90% | 12.37% | 11.55% | 3 of 6 |
| Since inception | 11.41% | – | – | – |
Kotak ranks second over 5 and 7 years and third over 10 years. It beat the benchmark over 5 years (8.86% against 8.76%). Over 3 years it ranks fourth, slightly below the benchmark.
The past year was harder. Kotak tied for sixth at -6.04% as on 18 September, and its 1-year return had fallen to -12.37% by 23 October (Value Research).
The portfolio is 98.37% equity. Its top holdings are HDFC Bank (8.51%), ICICI Bank (6.13%), Infosys (4.60%), State Bank of India (3.80%), Reliance Industries (3.62%) and Sun Pharmaceutical (3.38%). Financial stocks are 34.20% of the portfolio, industrials 13.74% and technology 12.93%.
Scheme C (corporate bonds)
| Period | Kotak | Benchmark | Average of all funds | Rank |
|---|---|---|---|---|
| 1 year | 5.76% | 4.90% | 5.26% | 1 of 10 |
| 3 years | 7.66% | 7.05% | 7.50% | 2 of 9 |
| 5 years | 6.44% | 6.19% | 6.43% | 4 of 7 |
| 7 years | 7.09% | 7.48% | 7.33% | 7 of 7 |
| 10 years | 7.23% | 7.59% | 7.52% | 6 of 6 |
| Since inception | 9.01% | – | – | – |
Kotak’s corporate bond scheme looks best on short periods and worst on long ones. It ranks first over 1 year and second over 3 years. But it ranks last over 7 and 10 years, and its 10-year return of 7.23% trails the benchmark (7.59%).
The portfolio is 77.96% AAA-rated and 16.88% AA-rated, the third-highest AA share among the ten. It also holds 3.75% in REITs.
Scheme G (government bonds)
| Period | Kotak | Benchmark | Average of all funds | Rank |
|---|---|---|---|---|
| 1 year | 2.68% | 3.43% | 2.93% | 8 of 10 (tied) |
| 3 years | 5.85% | 6.75% | 6.25% | 9 of 9 |
| 5 years | 5.48% | 5.90% | 5.73% | 7 of 7 |
| 7 years | 6.33% | 6.41% | 6.55% | 7 of 7 |
| 10 years | 6.87% | 6.86% | 7.07% | 6 of 6 |
| Since inception | 8.00% | – | – | – |
This is Kotak’s weak spot. It ranks last over 3, 5, 7 and 10 years. Over 10 years, ₹1 lakh grew to about ₹1.94 lakh, against ₹2.09 lakh with LIC.
The portfolio is 88.92% sovereign, with 8.52% in cash and a small 0.82% rated A or below. Its largest holding is a 6.90% government bond maturing in 2065, at 11.03% of the fund.
MSF schemes
| Scheme (as listed by NPS Trust) | Equity range | Assets (₹ crore) |
|---|---|---|
| Kuber Equity – I | 80%-100% | 40.74 |
| Atmanirbhar Fund | 25%-75% | 0.64 |
NPS Trust, as on 30 September 2026.
Kuber Equity holds 80% to 100% in equity and has ₹41 crore. Atmanirbhar, a balanced scheme with 25% to 75% equity, had less than ₹1 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 E: a top-three record over 5, 7 and 10 years.
- Scheme C: strong recently, last over 7 and 10 years.
- Scheme G: the weakest record of all ten funds.
- Active choice: a reasonable pick for Scheme E, paired with a different fund for government bonds such as LIC. You can hold up to three pension funds, one per asset class.
- Auto choice: the government bond weakness grows with age. By 55, government bonds are 55% to 90% of an auto choice account, depending on the life cycle fund. If you’re in auto choice with Kotak in your 40s or 50s, compare it with a fund that is stronger in Scheme G.
Compare it with the rest in the Scheme E, Scheme C and Scheme G comparisons, and the auto choice comparison.
Sources: returns for Tier I as on 18 September 2026, NPS Trust data as published by HDFC Securities; October return from Value Research. Net assets and portfolios: Value Research, October 2026. MSF schemes: NPS Trust. Fees: PFRDA. Past returns do not guarantee future returns.
