Scheme C holds bonds issued by companies, banks and public-sector bodies. It is the middle layer of an NPS account, safer than equity and usually better-paying than government bonds. Ten pension funds run it, and under active choice you can pick a different fund for Scheme C than for equity or government bonds.
Here is how all ten compare.
Returns: all 10 funds
| Pension fund | 1 year | 3 years | 5 years | 7 years | 10 years | Since inception |
|---|---|---|---|---|---|---|
| HDFC | 5.35% | 7.71% | 6.67% | 7.64% | 7.85% | 8.96% |
| SBI | 5.44% | 7.63% | 6.47% | 7.37% | 7.62% | 9.28% |
| ICICI Prudential | 5.39% | 7.54% | 6.46% | 7.29% | 7.62% | 9.26% |
| Kotak | 5.76% | 7.66% | 6.44% | 7.09% | 7.23% | 9.01% |
| UTI | 5.59% | 7.61% | 6.41% | 7.37% | 7.39% | 8.53% |
| Aditya Birla Sun Life | 4.76% | 7.33% | 6.35% | 7.32% | – | 8.00% |
| LIC | 4.88% | 7.23% | 6.20% | 7.24% | 7.42% | 8.65% |
| Tata | 4.89% | 7.41% | – | – | – | 6.99% |
| Axis | 5.16% | 7.37% | – | – | – | 7.36% |
| DSP | 5.42% | – | – | – | – | 7.51% |
| Benchmark | 4.90% | 7.05% | 6.19% | 7.48% | 7.59% | – |
| Average of all funds | 5.26% | 7.50% | 6.43% | 7.33% | 7.52% | – |
Tier I, as on 18 September 2026. Funds sorted by 5-year return; funds without a 5-year record are at the bottom.
What the numbers show
HDFC leads on every long period. It ranks first over 3, 5, 7 and 10 years. It is also the only fund that beat the benchmark over 7 years (7.64% against 7.48%).
The spread between funds is narrow. Over 10 years, the best (HDFC, 7.85%) and weakest (Kotak, 7.23%) are 0.62 percentage points apart. ₹1 lakh grew to about ₹2.13 lakh against ₹2.01 lakh. That is a real gap, but far smaller than in equity.
Most funds beat the benchmark over 3 and 5 years. Every fund with a 3-year record beat the 7.05% benchmark, and every fund with a 5-year record beat 6.19%. Over 10 years, only HDFC, ICICI Prudential and SBI did.
Kotak’s recent lead does not show up in the long run. Kotak has the best 1-year return (5.76%) and the second-best 3-year return. But it ranks last over 7 and 10 years.
One-year returns sit below the bonds’ coupons. The funds’ larger holdings pay coupons of about 7% to 8%, yet 1-year returns were 4.76% to 5.76%. The difference is a fall in bond prices, which happens when interest rates rise. It continued after 18 September: by 23 October, HDFC’s and SBI’s 1-year returns had slipped below 3% (Value Research).
Credit quality: how much risk each fund takes
A corporate bond fund can raise its return by holding more AA-rated bonds, which pay more than AAA bonds but carry more default risk.
| Pension fund | AAA-rated | AA-rated |
|---|---|---|
| Aditya Birla Sun Life | 89.08% | 6.68% |
| LIC | 86.43% | 8.67% |
| UTI | 81.26% | 10.28% |
| Axis | 80.68% | 9.20% |
| HDFC | 78.49% | 17.26% |
| ICICI Prudential | 78.41% | 16.12% |
| Kotak | 77.96% | 16.88% |
| Tata | 76.23% | 14.79% |
| SBI | 73.54% | 16.06% |
| DSP | 71.68% | 21.49% |
Share of the portfolio. The rest is mainly cash, REITs and government bonds. Value Research, October 2026.
The range is wide:
- Most conservative: Aditya Birla Sun Life (6.68% AA) and LIC (8.67% AA).
- Most AA-heavy: DSP (21.49% AA), HDFC (17.26%) and Kotak (16.88%).
The conservative funds paid for their caution. LIC ranks last over 3 years, and Aditya Birla Sun Life ranks last over 1 year. HDFC took more credit risk than most and earned the best long-term record. More AA bonds raise the return only if none of them default, which is why the long record matters more than any single year.
Where the money sits
| Pension fund | Tier I assets (₹ crore) | Share |
|---|---|---|
| HDFC | 37,054 | 41.5% |
| SBI | 17,078 | 19.1% |
| ICICI Prudential | 15,287 | 17.1% |
| Axis | 5,349 | 6.0% |
| LIC | 4,655 | 5.2% |
| UTI | 2,606 | 2.9% |
| Aditya Birla Sun Life | 2,061 | 2.3% |
| Tata | 1,866 | 2.1% |
| Kotak | 1,804 | 2.0% |
| DSP | 1,587 | 1.8% |
| Total | 89,347 | 100% |
Approximate Tier I net assets, Value Research, October 2026.
HDFC manages about 41% of all Scheme C Tier I money. HDFC, SBI and ICICI Prudential together hold close to 78%.
How to choose your Scheme C fund
- Look at 5 and 10 years. HDFC, SBI and ICICI Prudential lead the long-term columns.
- Check the credit mix. If you want Scheme C to be the steady part of your account, a lower AA share is reasonable, even at a slightly lower return.
- Keep the gaps in proportion. Over 3 and 5 years, the top and bottom funds are less than half a percentage point apart. Your Scheme E choice moves your corpus more than this one.
- Mix funds if it helps. Under active choice you can use up to three pension funds, one per asset class. For example, one fund for Scheme E and another for Scheme C.
See the Scheme E and Scheme G comparisons, or the individual reviews of HDFC, SBI and ICICI Prudential.
Sources: returns for Tier I as on 18 September 2026, NPS Trust data as published by HDFC Securities. Net assets and credit mix: Value Research, October 2026. Past returns do not guarantee future returns.
