Investors who spread their money across all three types of funds have not done too badly either. Here again, the short-term picture is rather bleak due to the poor returns by the equity funds.The best performer in the past one year, Kotak Pension Fund, has given only 5.42%.But the mediumand long-term returns are reasonably attractive. ICICI Prudential Pension Fund is again the best performing fund for this allocation, with returns of 9.85% in the past five years.

The balanced approach, which puts 33.3% in each of the three classes of funds, will suit most investors. It has the potential to give reasonably good returns in the long term without taking too much risk. Please note that the 5-year SIP returns of the balanced portfolio of all pension funds is above 10%. The 3-year SIP returns are also close to double digits.

The investor will need to change his allocation as retirement nears. There are sev eral theories about how much should be the allocation to equities at different ages.Some planners say that it should be 100 minus your age. But the maximum equity allocation in the NPS is 50%. Besides, you might also have invested in other instruments for your retirement.

Investors who can't take a decision should opt for the lifecycle fund of the NPS. It is also the default option for someone who has not indicated his desired allocation. Under this option, the investor's age decides the equity exposure. The 50% allocation to the equity fund is reduced every year by 2% after the investor turns 35, till it comes down to 10%. The rebalancing happens every year on the investor's birthday.

This is in keeping with the strategy to opt for a higher-risk , higher-return portfolio mix earlier in life. As the investor approaches retirement, he shifts to a more stable, low-risk portfolio.