PFRDA to allow subscribers to keep 50% investment in equity upto 45 yrs age

The Pension Fund Regulatory and Development Authority (PFRDA) is set to launch a new National Pension Scheme (NPS) which will allow subscribers to keep 50 per cent of their investment in equity funds until a higher age limit of 45 years. At present, the pension regulator allows 50 per cent investment in equity funds until the age of 35 years, after which it starts to taper off with a proportionate increase in allocation for debt funds.

PFRDA chairman Deepak Mohanty on Friday said the NPS balance lifecycle scheme that is designed to effectively manage both risks and returns may be launched in July or August.

“The fund will be an additional option in the auto choice where equity allocation can be a maximum of up to 50 per cent, but the tapering would start only after 45 years of age. This will help subscribers accumulate more corpus in their individual retirement fund," Mohanty said on the sidelines of the PFRDA's Annual Felicitation Program for Atal Pension Yojana (APY) in New Delhi.

Mohanty mentioned that current NPS subscribers will have the option to transition to this new scheme. Additionally, all pension funds will offer the revised NPS Balance Lifecycle scheme to their subscribers.

Mohanty mentioned that an NPS scheme offering assured returns has been under development for a while. However, he said that it's difficult to set a specific timeline for its launch but suggested that once closer to completion, they might target a timeline.

The combined total corpus of NPS and APY currently stands at Rs 12.4 trillion, with the PFRDA expecting to reach Rs 15 trillion in FY25. He further highlighted that the majority of these assets under management (AUM) belong to NPS, while APY constitutes a smaller portion amounting to Rs 38,000 crore. Mohanty also expressed his intention to enhance NPS outreach through regional rural banks.

Regarding the Atal Pension Yojana, Mohanty noted that 1.2 crore new subscribers were enrolled in FY24 and the target for the current financial year is 1.3 crore subscribers.

As of June 15, the total Assets Under Management (AUM) for the Atal Pension Yojana, which caters to the unorganised sector, amounted to Rs 37,850 crore.

“A majority of the new enrolments last fiscal were women against previous trends. As much as 52 per cent of the 1.23 crore new enrolments were women subscribers,” Mohanty said. The total enrolments in APY stand at 6.6 crore and the PFRDA expects to add another 1.3 crore subscribers in FY25, the chairman added.