PFRDA to soon allow more investment rebates to NPS subscribers

As of now, subscribers under the NPS scheme are allowed to change the investment pattern twice in a financial year.

Just last month, PFRDA Chairman Supratim Bandyopadhyay said, “One can change the investment option twice in a year. Now, in a very short span of time, we are going to increase it to four times as there are requests that you allow more number.” Give time (to change the investment pattern).”

He said that PFRDA only wants a cautionary note that it is a long-term investment (product) for creating a pension fund, and should not be treated at the same time as a mutual fund scheme.

“People sometimes mix it with some mutual fund which can give good returns. You have to give it some time and after that, only you can use it (change option). Use it judiciously, we Going to increase it. Four times in a year (financial year),” said the Chairman of Pension Fund Regulatory and Development Authority (PFRDA).

Subscribers are allowed to allocate their investments in a mix of instruments such as government securities, debt instruments, asset-backed and trust-structured investments, short-term debt investments, and equity and related investments.

However, there are different rules for different sets of customers. For example, government sector employees cannot have high exposure to equity, while corporate sector employees are allowed to allocate up to 75 per cent of assets to equity.

Separately, subscribers are also allowed to change their fund managers once in a year. Fund managers invest the pension assets of the clients in fixed investment schemes of their choice.

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

Bandyopadhyay also said that PFRDA wants to introduce a variable annuity product to post-retirement customers, with an aim to protect them from inflation.

“Once the annuity is introduced, it remains constant for your lifetime. Of course, there is an annuity (product) that gives a simple increase of three percent per year, but obviously, it does not take into account inflation risk. Will keep

“We are talking to the insurance regulator (Irdai) as annuity is basically their domain and we are also talking to annuity service providers to see if they can think of this kind of variable annuity which will be able to keep up with inflationary growth. may provide some cushion against,” he said.

The Chairman of PFRDA said that the Insurance Regulatory and Development Authority of India (IRDA) has constituted a working committee and the committee has also submitted a report.

“We are in discussions with Irdai to ensure that such products are released at the earliest,” he added.

To get a steady stream of pension, NPS subscribers need to buy an annuity with 40 per cent corpus at the time of retirement.

The official also urged the industry body to urge the associated corporates to opt for the NPS scheme as well as encourage their employees so that the pension requirements at the time of retirement are well taken care of.

He said that the total number of subscribers under National Pension System (NPS) including Atal Pension Yojana (APY) has so far exceeded 4.80 crore, only 13 lakh subscribers are from the corporate sector.