PFRDA plans to create NPS fund-of-funds to channelise money to select AIFs

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Pension Fund Regulatory and Development Authority (PFRDA) chairman S Ramann on Tuesday said the regulator would create an NPS fund-of-funds platform to channelise pension money to select alternative investment funds (AIFs).

PFRDA has classified all alternate investment instruments into equity and debt after Sebi categorised Real Estate Investment Trusts (REITs) as equity.

"Over the last few years, we have worked to classify alternate assets more clearly, strengthen governance structures, and build a centralised and transparent NPS (National Pension System) fund of funds platform that can select AIFs with rigour and credibility," Ramann said at IVCA DII & Exits 2025.

This gives every pension fund, large or small, the confidence to deploy capital without compromising on prudence, he added.

"India's next phase of capital formation must be built on strong domestic pools of patient capital. Pension assets, by design, are long-term and stable, and our effort at PFRDA is to create a framework that allows these funds to participate meaningfully in India's private market growth.

"We fully recognise that risk capital comes with cycles, but a well-diversified AIF portfolio, backed by robust oversight and long-term horizons, can still deliver outcomes that are beneficial for subscribers," he said.

India cannot rely only on seven to ten-year fund structures, he said, adding that there is a need to embrace longer tenor and perpetual vehicles that match the nature of retirement savings.

"If India is to unlock the full power of domestic institutional investors, we must align incentives, deepen trust through process excellence, and enable wider participation from pension, insurance, and retirement assets. The opportunity is immense, and with the right guardrails, domestic capital can become a powerful anchor for India's long-term growth story," he added.