PFRDA forms panel to work on guaranteed pension product for non-govt sector

Regulator is working on multiple products leading to a guaranteed offering; guidelines for innovative bonds and the Swasthya scheme are expected in the coming days

The Pension Fund Regulatory and Development Authority (PFRDA) has set up a committee to work on a guaranteed-return pension scheme for the non-government sector, PFRDA Chairperson Sivasubramanian Ramann said on the sidelines of the Global Fintech Fest (GFF) on Thursday.

 

Ramann said the regulator was working with an expert panel on multiple products that would lead to a fully guaranteed offer.

 

“We have to work on a guaranteed-return scheme because there is a mandate within our Act ... The most difficult part is who is going to provide that guarantee when we create this kind of pension product for the non-government sector. We’ve the committee and we’re working with them (the committee),” he said.

 

 

As an interim step, the PFRDA has introduced a retirement-income scheme that is not guaranteed but is designed to grow the retirement corpus for people between the age of 60 and 80, allowing subscribers to draw down monthly.

 

Further, Ramann said the PFRDA was working on bonds that could provide inflation-protected outcomes for the proposed guaranteed-pension products, noting that annuities currently available in the market were not inflation-protected — a gap the new bonds were meant to address.

 

“The guidelines will be out in a couple of days,” he said.

 

On the proposed Swasthya scheme, Ramann said the proof of concept had an encouraging response, and the final guidelines were expected to be released in the next couple of days.

 

He said the product should be launched in about 30 days once technology partners, the Central Recordkeeping Agencies (CRAs), completed the back-end integration with health providers.

 

Under the scheme, pension-account funds can be used to pay hospital bills directly, supplemented by topup insurance of roughly 8-10 times the subscriber’s own contribution.

 

On expanding pension coverage, Ramann said the regulator’s focus was on bringing India’s large non-taxpaying, informal workforce, nearly 90 per cent of all working people, into the pension net through technology.

 

He cited NPS (National Pension System) Tatkal, run through providers of Unified Payments Interface (UPI), and the Ministry of Labour’s e-Shram database as key tools in enabling quick, mobile-based account opening followed by UPI-based contributions.

 

On commodities, he said current investment guidelines allowed pension funds to allocate up to 1 per cent (of the corpus) to commodities like gold, with one or two funds having already done so, as part of a broader push toward asset diversification.

 

On new entrants, Ramann said Bank of Baroda had received in-principle approval to set up a pension fund subsidiary, taking the total to 14 once the four new entities, approved over and above the existing 10, were operational.