"Debt securities selected for investments should have a minimum residual maturity period of 3 years from the date of investment by the pension fund," the Pension Fund Regulatory and Development Authority (PFRDA) said in a notification to all pension funds for the government sector.
At present, there are three fund managers for managing pension corpus of government employees. They are LIC Pension Fund Ltd, SBI Pension Funds Pvt Ltd and UTI Retirement Solutions Ltd.
Besides, it said, the debt securities must have an investment grade rating from at least two credit rating agencies.
Apart from ratings by agencies, pension funds should undertake their own due diligence of assessment of risk associated with securities before investments, it said.
Credit Default Swaps (CDS) on corporate bonds are also eligible derivative instruments, it said.
These changes have been made to enhance safety of investment by pension funds.
Both NPS Lite and private sector schemes follow the government pattern of investment and hence investment guidelines as applicable to the government sector and any subsequent amendments to investment guidelines of government sector will be applicable to these schemes as well, it added.
Private sector pension corpus is managed by 8 players including three fund managers who manages the government employees' corpus.
The other five players are HDFC Pension Management Company Ltd, ICICI Prudential Pension Funds Management Company Ltd, Kotak Mahindra Pension Fund Ltd, Reliance Capital Pension Fund Ltd and DSP BlackRock Pension Fund Managers Pvt Ltd.