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I have already been investing in equity mutual funds for my retirement. What additional advantage do they have over investing in NPS Tier II, because the latter has better fund management charges? - Ram Dittakavi
Nothing can match the low cost of the NPS (National Pension Scheme). However, their investment universe is limited to the top 200 companies. In comparison, many equity funds have the flexibility to invest beyond the 200 largest companies. In fact, for a long-term investor targeting retirement, having mid- and small-cap exposure can significantly boost the overall return.
So, you can probably combine both - use NPS Tier II for large-cap exposure and equity funds for investing in mid and small caps.
Also read: NPS has been superior to EPF. Is it time to switch?