NPS Tier-I Equity Funds: How Your Pension Fund Manager Has Performed
- Ayesha Bee
- Nov 4
- 4 min read
Introduction
The National Pension System (NPS) is a retirement savings scheme launched by the Government of India, regulated by the Pension Fund Regulatory and Development Authority (PFRDA), to help individuals build a corpus for their life after retirement. Think of it as a long-term investment plan with a mix of equity, corporate debt, and government bonds like a mutual fund for retirement.
You can choose from 4 asset classes to invest:
In this blog, we’ll focus on the Equity (Tier-I) Schemes of the National Pension System (NPS), analyzing how each pension fund manager has performed over different time periods. From 1-year to 5-year returns, we’ll see which funds have consistently delivered strong results and which ones have lagged behind. The benchmarks for these funds are NIFTY 50 and NIFTY 100.
Understanding NPS Tier-I Equity Schemes
There are a total of 10 schemes available under the NPS Tier-I Equity (E) option, each managed by a different Pension Fund Manager (PFM).
Return Trends in NPS Tier-I Equity Funds – 1-Year to Long-Term View
As of October 17, 2025, the performance of NPS Tier-I Equity Funds shows significant variation among pension fund managers:
DSP Pension Fund emerged as the top performer, delivering a 6.50% 1-year return well above the benchmark return of 2.65%.
Kotak Mahindra Pension Fund followed with a 5.47% return, demonstrating strong equity market exposure and effective fund management.
Mid-range performers included Tata Pension (3.69%), LIC Pension (3.64%), ICICI Prudential (3.85%), and HDFC Pension (3.44%), all of which comfortably outperformed the benchmark.
On the lower side, SBI Pension (0.51%) and Axis Pension (0.84%) lagged behind both the benchmark and peers, suggesting either a conservative allocation or underperformance in stock selection.
ABSL Pension (1.49%) and UTI Pension (1.95%) also underperformed the benchmark, but with a relatively smaller gap compared to SBI and Axis.
The long-term performance comparison (as of 2025) highlights how NPS Tier-I Equity Funds have fared over 5-year and 7-year periods against their benchmarks.
The benchmark returns stood at 19.76% (5-year) and 15.84% (7-year), setting a high bar for fund managers.
5-Year Performance: Out of the 7 NPS Tier-I Equity Schemes, 3 schemes - Kotak Mahindra Pension (20.24%), ICICI Prudential Pension (20.16%), and UTI Pension (20.05%) - outperformed the 5-year benchmark return of 19.76%.
7-Year Performance: Similarly, only one scheme, Kotak Mahindra Pension (16.13%), managed to outperform the 7-year benchmark return of 15.84%.
Oldest Funds (Launched in 2009)
ICICI Prudential (13.08%), Kotak Mahindra (12.62%), SBI Pension (11.24%), and UTI Pension (13.00%) are among the oldest, with over 15 years of market history.
Their long-term returns range between 11% and 13%, reflecting steady compounding through multiple market cycles.
While these returns are moderate, they demonstrate stability and consistency, a key trait for retirement portfolios that prioritize risk control over aggressive outperformance.
Mid-Aged Funds (2013–2017)
HDFC Pension (15.05%), LIC Pension (13.37%), and Aditya Birla Sun Life Pension (13.50%) were launched between 2013 and 2017.
These funds show slightly higher inception returns (13–15%), benefiting from a longer bull phase post-2014 and professional fund management.
HDFC Pension stands out as the best performer in this group with 15.05%, reflecting its large AUM and consistent equity exposure.
New Entrants (2022–2023)
Axis Pension (14.40%), Tata Pension (16.80%), and DSP Pension (17.64%) are the newest entrants, with performance data covering only 1–2 years.
Their returns appear exceptionally high (14–18%), but this is largely due to favorable market conditions during their short operating period.
Particularly, DSP Pension Fund (17.64%) and Tata Pension Fund (16.80%) show strong early momentum, impressive but still too recent to assess long-term consistency.
Also Read: Does Adding Gold to Equity Portfolio Reduce Risk? Here’s Our Analysis Based on 29 Years of Data
Portfolio Insights: NPS Tier-I Equity Funds
Top 5 Holdings (Common Across Most Funds)
Across all 10 NPS Tier-I equity schemes, the portfolios show a strong preference for large-cap, high-quality stocks that form the backbone of the Indian equity market:
HDFC Bank Ltd.
ICICI Bank Ltd.
Reliance Industries Ltd.
Infosys Ltd. / Bharti Airtel Ltd. (varying across funds)
State Bank of India / Larsen & Toubro / ITC Ltd. (appearing in several portfolios)
These holdings are consistent across fund managers, reflecting a shared strategy of investing in stable, high-weight index constituents with proven fundamentals and liquidity.
Weightage of Top 5 Holdings
The Top 5 stocks account for around 25–30% of most schemes’ portfolios, showing moderate concentration.
However, DSP Pension Fund is an exception, with 44.7% of its portfolio concentrated in its top 5 holdings, suggesting a more focused, high-conviction strategy compared to peers.
Top 3 Sectors (Common Theme Across Funds)
Banking and Financial Services (Monetary Intermediation) — The dominant sector in all portfolios, driven by strong exposure to HDFC Bank, ICICI Bank, and SBI.
Oil & Gas / Energy — Mainly represented by Reliance Industries Ltd., contributing to sectoral balance and index alignment.
IT & Communication / Telecom — Exposure to Infosys and Bharti Airtel adds a technology and connectivity edge.
Some funds also include Infrastructure, Cement, and Mutual Fund/Investment Holding companies, but with smaller weights.
Before we conclude this blog, we invite you to a one-on-one financial planning session.
Conclusion
The NPS Tier-I Equity Schemes have demonstrated that disciplined, long-term investing can deliver solid market-aligned growth. While newer entrants like DSP and Tata Pension Funds have shown strong early returns, the established players, such as HDFC, ICICI Prudential, and Kotak Mahindra, continue to offer consistency backed by experience and scale.
For investors, the key lies in staying invested, reviewing fund performance periodically, and considering insights from a registered Investment Advisor for a better understanding of NPS options.
Comments