Pension fund regulatory body proposes MoF to increase its equity investments

CLR Note: The Pension fund regulatory body has preferred a proposal  to the Ministry of Finance to increase the investment limit of pension funds upto 50 per cent in the equity in the stock market. As currently, the pension funds under the regulatory body is allowed to invest up to 15 per cent of the corpus into the stock market.

Finance Ministry will go through the proposal seeking a hike in the investment limit of pension funds by up to 50 per cent and then refer the matter to an expert committee for taking a call on the same.

The Pension Fund Regulatory and Development Authority of India (PFRDA) has sought approval of Finance Ministry to raise the limit of government employees’ pension funds in the stock market up to 50 per cent.

Currently, the pension funds under PFRDA is allowed to invest up to 15 per cent of the corpus into stock market and they believe that they should also be given the same exposure to the stock market as the employees of private sector companies.

PFRDA had set up an expert panel under the chairmanship of ex-Sebi chief G N Bajpai to review investment guidelines for National Pension System (NPS) schemes in private sector.

Contractor said equity in the long run is always better performing than other instruments.

The Bajpai committee has recommended diversifying investment portfolio of NPS scheme into private equity and venture capital funds.

PFRDA regulates NPS which is subscribed by employees of both central and state governments, besides private institutions and unorganised sectors.

At present, NPS funds can be invested in government securities, corporate bonds and equities.


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