How to Calculate NPS Returns?
NPS
Jan 7, 2025
Scheme G invests in central and state government bonds. It carries almost no default risk, which is why it makes up most of an NPS account as you approach retirement under auto choice. But it is not risk-free: long-dated government bonds rise and fall sharply with interest rates.
All ten pension funds run Scheme G. Here is how they compare.
Returns: all 10 funds
| Pension fund | 1 year | 3 years | 5 years | 7 years | 10 years | Since inception |
|---|---|---|---|---|---|---|
| Aditya Birla Sun Life | 3.14% | 6.54% | 5.98% | 6.73% | – | 7.37% |
| UTI | 3.02% | 6.46% | 5.84% | 6.52% | 6.88% | 7.91% |
| LIC | 3.14% | 6.46% | 5.81% | 6.68% | 7.63% | 9.05% |
| SBI | 2.93% | 6.45% | 5.78% | 6.58% | 7.09% | 8.60% |
| ICICI Prudential | 3.20% | 6.31% | 5.69% | 6.48% | 6.96% | 8.09% |
| HDFC | 2.82% | 6.06% | 5.50% | 6.52% | 6.99% | 8.33% |
| Kotak | 2.68% | 5.85% | 5.48% | 6.33% | 6.87% | 8.00% |
| Axis | 3.14% | 6.18% | – | – | – | 6.66% |
| Tata | 2.58% | 5.95% | – | – | – | 6.47% |
| DSP | 2.68% | – | – | – | – | 6.40% |
| Benchmark | 3.43% | 6.75% | 5.90% | 6.41% | 6.86% | – |
| Average of all funds | 2.93% | 6.25% | 5.73% | 6.55% | 7.07% | – |
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
LIC has the best long-term record by a clear margin. Its 10-year return of 7.63% is 0.54 percentage points ahead of the next fund, SBI (7.09%). ₹1 lakh grew to about ₹2.09 lakh with LIC against ₹1.94 lakh with Kotak, the weakest over 10 years. LIC also ranks second over 7 years and joint second over 3 years.
Aditya Birla Sun Life leads the shorter long-term periods. It ranks first over 3, 5 and 7 years, but it doesn’t have a 10-year record yet.
Kotak ranks last over 3, 5, 7 and 10 years.
Results flip depending on the period. No fund beat the benchmark over 1 or 3 years. Only Aditya Birla Sun Life beat it over 5 years. Yet six of seven beat it over 7 years, and all six beat it over 10 years.
One-year returns were weak. They ranged from 2.58% to 3.20%, though the bonds pay coupons of roughly 6.9% to 7.7%. Bond prices fell during the year, and long-dated bonds fall the most.
How long the bonds are
Most Scheme G portfolios hold very long government bonds, many maturing between 2050 and 2076. ICICI Prudential is the exception among the largest holdings, with a 2036 bond on top.
| Pension fund | Largest holding | Share of fund |
|---|---|---|
| DSP | 7.71% GOI 2066 | 20.44% |
| Tata | 6.90% GOI 2065 | 19.25% |
| Axis | 6.90% GOI 2065 | 18.06% |
| SBI | 7.24% GOI 2055 | 15.64% |
| UTI | 6.90% GOI 2065 | 13.56% |
| Kotak | 6.90% GOI 2065 | 11.03% |
| HDFC | 7.34% GOI 2064 | 11.02% |
| ICICI Prudential | 6.94% GOI 2036 | 10.17% |
| Aditya Birla Sun Life | 7.71% GOI 2066 | 8.81% |
| LIC | 7.34% GOI 2064 | 8.19% |
Value Research, holdings as of the latest month shown (July to September 2026).
Long bonds suit a pension portfolio because they lock in today’s yield for decades. The cost is volatility. When interest rates rise, these bonds lose value, which is what happened over the past year. When rates fall, they gain the most.
Concentration differs too. DSP, Tata and Axis each have close to a fifth of the fund in one bond. LIC’s largest single bond is 8.19%.
Sovereign share
Scheme G is mostly, not entirely, government bonds. The rest is cash and a small amount of AAA-rated paper.
| Pension fund | Sovereign bonds |
|---|---|
| LIC | 96.51% |
| UTI | 95.79% |
| Tata | 94.97% |
| HDFC | 91.53% |
| Axis | 91.47% |
| DSP | 90.18% |
| Kotak | 88.92% |
| Aditya Birla Sun Life | 88.87% |
| SBI | 88.69% |
| ICICI Prudential | 86.80% |
Value Research, October 2026.
Where the money sits
| Pension fund | Tier I assets (₹ crore) | Share |
|---|---|---|
| HDFC | 57,601 | 39.1% |
| SBI | 31,983 | 21.7% |
| ICICI Prudential | 24,703 | 16.8% |
| LIC | 9,370 | 6.4% |
| Axis | 7,871 | 5.3% |
| UTI | 4,509 | 3.1% |
| Aditya Birla Sun Life | 3,480 | 2.4% |
| Kotak | 2,923 | 2.0% |
| DSP | 2,419 | 1.6% |
| Tata | 2,399 | 1.6% |
| Total | 147,258 | 100% |
Approximate Tier I net assets, Value Research, October 2026.
How to choose your Scheme G fund
- Give the 10-year record the most weight. Government bond returns move with interest rate cycles, and only the 10-year column spans a full one. LIC leads it.
- Expect years like this one. Long bonds can return 3% in a year when rates rise. Judge the fund over a cycle, not a year.
- Remember that Scheme G grows with age. Under the default Life Cycle 50 – Moderate fund, government bonds rise from 20% of your account at 35 to 80% at 55 and after. By your 50s, this is likely to be your biggest scheme.
- Mix funds if it helps. Under active choice you can use up to three pension funds, one per asset class.
See the Scheme E and Scheme C comparisons, the auto choice comparison, and the reviews of LIC, Aditya Birla Sun Life and SBI.
Sources: returns for Tier I as on 18 September 2026, NPS Trust data as published by HDFC Securities. Net assets and holdings: Value Research, October 2026. Life cycle allocations: PFRDA. Past returns do not guarantee future returns.
