PFRDA: NPS equity investment cap to remain at 50%

The Pension Fund Regulatory and Development Authority (PFRDA) today said it favoured retaining the cap on investment in equities by the New Pension Scheme at 50 per cent, irrespective of the recommendations of the Bajpai committee.

The NPS comprises three investment categories —- G (ultra safe), C (safe) and E (medium). Of these, the E category investments are invested in equity-related products, the cap for which is 50 per cent.

“We think at the current stage of the pension market in the country, investing more than 50 per cent in equities is not going to be fair to investors, in terms of the risk. Therefore, we would retain the cap at 50 per cent,” PFRDA Chairman Yogesh Agarwal told reporters on the sidelines of the 26th Skoch Summit.

Headed by former Securities and Exchange Board of India chairman G N Bajpai, the Bajpai committee is working on NPS’ fee structure and would suggest changes to the scheme. The report is expected by the third week of this month, Agarwal said.

NPS was initially launched for central government employees, but later extended to all citizens from May 1, 2009. Currently, seven pension fund managers account for assets of about Rs 9,000 crore. Of this, about Rs 100 crore is contributed by pension schemes for people other than government employees. These fund managers include LIC Pension Fund Ltd, SBI Pension Funds Ltd, UTI Retirement Solutions, IDFC Pension Fund Management, ICICI Prudential Pension Funds Management, Kotak Mahindra Pension Fund and Reliance Capital Pension Fund.