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| PFRDA plans fifth option for govt employees investment |
| Press Trust of India / Mumbai Nov 19, 2008, 12:50 IST |
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Pension Fund Regulatory and Development Authority (PFRDA) is considering a fifth option for investment of contribution made by government employees under the new pension scheme.
Called Default Option, it is a life-cycle fund under which the amount of money invested in equity would be more in the initial stages while in the later stages, more money would be invested in debt instruments.
"We are considering the Default Option, which is a life-cycle fund. The Deepak Parekh committee, which is looking at various investment plans for pension scheme is also considering this option. The committee is expected to submit the report by November 30," PFRDA Chairman D Swarup told PTI.
"Once recommended PFRDA will take a view on it. It could be one of the options," he said.
The Default Option, which is more balanced, provides a return which is much more than the option where money is invested wholly in debt instruments but certainly gives less returns than high-risk fully equity-based investments.
"Default Option has become a global trend. It is a future pension plan. In a country like India where financial literacy is very low and there is an inability to sense future risks, Default Option will be an appropriate option," LIC Pension Fund Chief Executive Officer H Sadhak said.
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