Expert panel for investment of NPS corpus into PE, VC funds

An expert committee on investment guidelines for National Pension System has recommended diversifying investment portfolio of NPS scheme into private equity and venture capital funds, PFRDA Chairman Hemant Contractor said today.

Currently, NPS funds can be invested only in Government Securities, corporate bonds and equities.

The total assets managed under NPS are about Rs 82,000 crore, while private sector contribution is just Rs 5,000 crore.

Contractor said PFRDA is "positively looking" into NPS investing a part of corpus into private equity (PE) and venture capital (VC), as recommended by the G N Bajpai committee.

"What they are proposing is a phased kind of transition from the direct regime of investment to a targeted kind of investment regime. It is a kind of diversifying the investment," he said.

The Pension Fund Regulatory and Development Authority regulates NPS, which is subscribed by employees of both central and state governments, besides private institutions and unorganised sectors.

"Right now we have investments in government securities, corporate bonds and equity (as investment instruments). What we will do is to put only a small amount, as risk is also high," Contractor said in an Assocham event here.

He said PRFDA is envisaging a phased kind of roll out of the new products in which pension industry can invest.

"A lot of thinking is going on about investment into private equity and venture capital," he said, adding that the the Bajpai committee report was submitted yesterday.

"What it deals with is the current investment pattern that NPS has been following. The fund managers, the fee structure, the commission structure, all those. We will put it up on the board of--the recommendations we think are worth implementing," he said.

The recommendations will be put before the board by next month or later, Contractor said.

That apart, he said PFRDA is readying itself along with banks to roll out the Atal Pension Yojana (APY), as announced by Finance Minister Arun Jaitley in 2015-16 Budget.

"We are right now in the process of readying ourselves along with the banks to roll out this product on June 1."

The APY will be focused on all citizens in the unorganised sector who join the NPS, and are not members of any statutory social security scheme.

Under APY, subscribers would receive fixed pension of Rs 1,000 per month, Rs 2,000 per month, Rs 3,000 per month, Rs 4,000 per month, Rs 5,000 per month, at the age of 60 years, depending on their contributions.