PFRDA widens pension fund investment rules to boost returns and diversity

India's pension regulator on Wednesday issued revised investment rules for the country's pension funds, allowing for more diversification in search of better returns.

The Pension Fund Regulatory and Development Authority (PFRDA) will now allow private pension funds to invest in the top 250 stocks by market capitalisation listed on India's bourses. Earlier, these funds were allowed to invest in a list of 200 stocks approved by the trust of the National Pension Scheme.

The PFRDA has also permitted investments in gold and silver ETFs, giving pension funds the option to diversify into commodity investments.

The changes were announced in a circular on Wednesday and are effective immediately.

The revised investment norms are the latest in a string of measures aimed at increasing the popularity of pension funds by allowing the private sector to offer a wider suite of options to savers. Earlier, the regulator had permitted pension fund houses to offer bespoke schemes to different client segments, based on their risk profiles.

The private pension fund industry oversees 15.78 trillion rupees ($175.59 billion) in assets, catering to 80 million subscribers, with the regulator aiming to expand that subscriber base to nearly 300 million by 2030.