NPS subscribers will soon be able to switch asset allocations 4 times a year


The pension fund regulator PFRDA will soon allow subscribers to the

Currently, subscribers under the

“We can change the investment choice twice a year. Now, in a very short period of time, we will increase it to four times because there are requests that you allow more times (to change the investment model),” PFRDA Chairman Supratim Bandyopadhyay said during a webinar on the

The only caveat PFRDA wants is that this is a long term investment (product) to build a pension corpus, and should not be treated as a mutual fund scheme , did he declare.

“People sometimes confuse it with a kind of mutual fund that can give good returns. You have to give it time and then only you can use it (option change). Use it wisely, we will increase it to four times a year (financial year),” said the Chairman of the Pension Funds Regulation and Development Authority (PFRDA).

Subscribers are permitted to spread their investments across a combination of instruments such as government securities, debt securities, asset-backed and trust-structured investments, short-term debt investments, equities and related investments.

However, there are different rules for different sets of subscribers. For example, public sector employees cannot have a high exposure to equities, while corporate sector employees are allowed to allocate up to 75% of assets to equities.

Separately, subscribers are also allowed to switch fund managers once a year. The fund managers invest subscribers’ pension assets in the prescribed investment plans, according to their choice.

Currently pension fund managers under NPS are – ICICI Prudential Pension Funds Management Company, LIC Pension Fund, Kotak Mahindra Pension Fund, SBI Pension Fund, UTI Retirement Solutions, HDFC Pension Management Co and Birla Sun Life Pension Management.

Bandyopadhyay also said that the PFRDA wants to offer a variable annuity product to subscribers after retirement, aimed at protecting them against inflation.

“Once the annuity starts it stays constant for your lifetime. inflation.

“We have spoken to the insurance regulator (Irdai) because annuity is basically their domain and we have also spoken to the annuity service providers if they can think of this type of variable annuity which can give some cushion against the rise of inflation,” he said.

The PFRDA Chairman said that the Insurance Regulatory and Development Authority of India (Irdai) has set up a working committee and a report has also been submitted by the committee.

“We are in discussion with Irdai to ensure that these types of products are brought to market as soon as possible,” he added.

NPS subscribers are required to purchase an annuity with 40 percent of the corpus at retirement to achieve a steady pension stream.

The official also urged the industry body to encourage companies associated with it to opt for the NPS scheme as well as encourage their employees to ensure that retirement needs at the time of retirement are well taken care of. charged.

He said that even though the total number of National Pension System (NPS) subscribers including Atal Pension Yojana (APY) has crossed over 4.80 crore so far, a measly 13 lakh subscribers belong to the sector. companies.

That life expectancy has increased over time and people live up to 15 to 20 years longer after retirement, he said it is not easy to generate a huge corpus for retirement and that it is necessary to start preparing from an early age to organize retirement needs.

The PFRDA administers two flagship pension schemes — the NPS and the APY. While the NPS primarily targets employees working in the public and organized sector, including businesses, the APY primarily targets those working in the unorganized sector.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)


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