NPS Interest Rates for Tier 1 & Tier 2 Cities Explained

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How Are NPS Rates Determined?

A question a reader may have is: how can the interest rate for NPS not be fixed? Here’s how!

When a person invests in the National Pension Scheme, there are two options. First, they can invest “Actively” or choose an “Auto” mode of investment.

Further, in the “Active” investment mode, investors will need to choose the class of investment (Class A, G, C, E), the percentage of their investment in these classes, and the fund manager.

Whereas, in the “Auto” mode, they can choose from one of 3 investment options based on the risks associated.

Therefore, NPS interest rates depend on all underlying funds in which they are invested. Since interest rates for different fund houses and asset types are different, interest rates are not fixed.

Further, any reader may be curious about what is the NPS interest rate for these different investment classes. The table below shows a range of interest rates for 5 and 10 years for the different investment classes in 2021.

Asset Class	5 Years Returns (approximate)	10 Years Returns (approximate)
Class E	13-15%	10-11%
Class C	9-10%	10-10.5%
Class G	10.2-10.8%	9.5-10%
Class A	4%-16% (1 year returns)	4%-16% (1 year returns)

Tier I or Tier II NPS Account Type	Investment Class	5 Years Returns from Top Funds
Tier I	Class E, Class C, Class G, Class A	11-15%, 10%, 9-11%, 7-8%
Tier II	Class E , Class C, Class G	9-12%, 9-10%, 9-12%

Tier I Accounts	3 Years Returns	5 Years Returns
Range of interest rate for the top funds	11-14%	10-11%

Tier II Accounts	3 Years Returns	5 Years Returns
Range of interest rate for the top funds	11-14%	8-11%

NPS Interest Rates for Tier 1 & Tier 2 Cities

How Are NPS Rates Determined?

What Are NPS Interest Rates 2020-21?

Is NPS Interest Taxable?

What Is The NPS Interest Return Rate for a Tier 1 Account?

What Is The NPS Interest Return Rate for a Tier 2 Account?

Does NPS Provide a Fixed Interest Rate?

Frequently Asked Questions

✓ How many times a year can a subscriber invest in the National Pension Scheme?

✓ What factors influence the withdrawal corpus amount?

✓ Where can I open a National Pension Scheme account?

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