Seeking an approval to invest 50 per cent of total funds contributed by government employees, India’s pension regulator, Pension Fund Regulatory and Development Authority (PFRDA), has written to the Central government. The PFRDA wants to invest the fund under National Pension Scheme (NPS) in stocks. According to Indian Express, the move will be significant as currently only 15 per cent of pension funds are invested to the stock markets. The NSP currently has a corpus of Rs 198,000 crore with almost 87 per cent of it being contributed by government employees. With its new plan of pension funds investment, the PFRDA’s would be able to invest over Rs 86,000 cr (which is additional Rs 57,000 cr) into the Indian stock market, if it gets government’s nod.
The daily further stated that NPS is an alternate option for those who are looking at retirement savings compared to Employees’ Provident Fund (EPF) for the organised sector which is overlooked by Employees Provident Fund Organisation (EPFO) of the government.
In July, the EPFO, which has a corpus of around Rs 10 lakh cr, decided to inject Rs 22,500 cr in exchange traded funds in 2017-18 after getting an approval from central board of trustees to increase the equity investment. Speaking to Indian Express, Hemant Contractor, PFRDA chairman said around to 13-14 per cent of NPS funds are invested in the equity market.
“We are planning to increase it. We have put up a proposal to the government to increase it to 50 per cent. In the case of government servants, the equity investment is limited to 15 per cent whereas in the case of non-government employees it can go up to as high as 50 per cent. It should be uniform for all,” he said.
PFRDA chairman also highlighted the body has stressed that government employees should be provided same choices and if this happen, it would be a big change in the ecosystem.
“Government money still accounts for 87 per cent of the total funds. That could make a lot of difference. In the long-term, it has shown that equity is the better investment in terms of returns,” Contractor said.