Key Takeaways
- • Freefincal founder M. Pattabiraman's November 2026 analysis argues that choosing an NPS pension fund on one-year returns can be misleading, and proposes three consistency measures: rolling-return outperformance, upside consistency and downside consistency.
- • Rolling-return outperformance consistency is calculated across overlapping periods; Pattabiraman's illustration shows a scheme beating its benchmark in 675 of 876 comparable periods, or roughly 77%.
- • Investors are advised to examine three-year and five-year windows, with a 60-70% outperformance threshold suggested as an initial screen before assessing upside and downside capture.
- • Excess return should be weighed against excess risk: the illustrative ICICI Prudential Pension Fund Scheme E delivered 12.385 percentage points of excess one-year return with volatility 0.140 points below its benchmark.
- • Schemes should be compared within their asset categories, since equity, government securities, corporate bond and gilt funds carry different mandates, and some non-equity benchmarks are notional.
Summary
Livemint reports that selecting a National Pension System (NPS) pension fund on the basis of its latest returns could be misleading. A scheme that posts strong one-year returns may not outperform its benchmark over longer horizons or protect investors when markets fall. For subscribers saving over 15-20 years, the article argues, consistency across market cycles matters more than a single year's result.
A November 2026 analysis by M. Pattabiraman, founder of the personal finance platform Freefincal, sets out three measures for evaluating NPS schemes: rolling-return outperformance consistency, upside performance consistency and downside performance consistency. Trailing returns capture only one starting and one ending point, whereas rolling returns examine all overlapping investment periods within the historical data. Pattabiraman's example shows a scheme outperforming its benchmark in 675 of 876 comparable periods, a consistency rate of about 77%. Investors are advised to review three-year and five-year windows.
Upside consistency measures how often a scheme beats its benchmark when the benchmark rises; a score of 70% means outperformance in seven of every ten rising periods. Downside consistency measures outperformance when the benchmark falls; a score of 60% means outperformance in six of ten declining periods. The article cautions that a high downside score shows relative resilience only and does not mean the scheme earned positive returns or avoided losses. This matters particularly for investors nearing retirement, when large losses are harder to recover from.
Risk-adjusted comparison is also important. Pattabiraman illustrates this with ICICI Prudential Pension Fund Scheme E under Tier I: a one-year return of 35.089% against 22.704% for its benchmark, an excess return of 12.385 percentage points, and a standard deviation of 3.592% versus 3.732% for the benchmark, meaning volatility was 0.140 points lower. He clarifies that these figures are illustrative and not current performance data.
Finally, the article advises comparing schemes within their asset categories rather than ranking all NPS funds together, because equity, government securities, corporate bond and gilt schemes have distinct mandates and risk profiles. Pattabiraman warns that benchmarks for non-equity schemes are notional and may not fully represent their asset classes. For shortlisting, a 60-70% rolling-consistency threshold can serve as an initial screen, though overly strict filters may exclude worthwhile schemes; he suggests retaining five to six candidates rather than seeking a single winner. The article concludes that historical outperformance does not guarantee future results, and that investors should weigh retirement horizon, asset allocation, risk appetite and proximity to retirement.
A November 2026 analysis by M. Pattabiraman, founder of the personal finance platform Freefincal, sets out three measures for evaluating NPS schemes: rolling-return outperformance consistency, upside performance consistency and downside performance consistency. Trailing returns capture only one starting and one ending point, whereas rolling returns examine all overlapping investment periods within the historical data. Pattabiraman's example shows a scheme outperforming its benchmark in 675 of 876 comparable periods, a consistency rate of about 77%. Investors are advised to review three-year and five-year windows.
Upside consistency measures how often a scheme beats its benchmark when the benchmark rises; a score of 70% means outperformance in seven of every ten rising periods. Downside consistency measures outperformance when the benchmark falls; a score of 60% means outperformance in six of ten declining periods. The article cautions that a high downside score shows relative resilience only and does not mean the scheme earned positive returns or avoided losses. This matters particularly for investors nearing retirement, when large losses are harder to recover from.
Risk-adjusted comparison is also important. Pattabiraman illustrates this with ICICI Prudential Pension Fund Scheme E under Tier I: a one-year return of 35.089% against 22.704% for its benchmark, an excess return of 12.385 percentage points, and a standard deviation of 3.592% versus 3.732% for the benchmark, meaning volatility was 0.140 points lower. He clarifies that these figures are illustrative and not current performance data.
Finally, the article advises comparing schemes within their asset categories rather than ranking all NPS funds together, because equity, government securities, corporate bond and gilt schemes have distinct mandates and risk profiles. Pattabiraman warns that benchmarks for non-equity schemes are notional and may not fully represent their asset classes. For shortlisting, a 60-70% rolling-consistency threshold can serve as an initial screen, though overly strict filters may exclude worthwhile schemes; he suggests retaining five to six candidates rather than seeking a single winner. The article concludes that historical outperformance does not guarantee future results, and that investors should weigh retirement horizon, asset allocation, risk appetite and proximity to retirement.
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