Pension Fund Regulatory & Development Authority (PRFDA) chairman D Swarup is in favour of investing upto 70% corpus of the pension fund in the Indian equity market, although the new pension bill, yet to be passed by the Parliament, allows equity investment only up to 50% of the pension fund corpus.
Addressing a news conference in Mumbai on Friday, after the convocation ceremony organised by Financial Planning Standards Board of India, Swarup said, ?In the past 50 years, the average long term yields from Indian equities have been not less than 14%. As experts worldwide foresee a similar appreciation scenario continuing on the bourses, pension fund?s substantial investment into the Indian equities for a long span is not a risky proposition. We should follow the US pension fund investment pattern to gain maximum equity appreciation at the lowest possible risk.?
He added, ?Most leading private fund managers of the country have approached us to manage the pension fund corpus. Provided the government allows, we are keen to appoint them too to compete with personnel from SBI, UTI, and LIC to manage our equity investments.?
Swarup urged the government to pass the new pension scheme bill in the forthcoming budget session.
?Since by the year 2020, the population of senior citizens in India is expected to cross the 160 million mark, the time is ripe now that we have initiated a reformed social security scheme in the country at the earliest possible. As for existing coverage of old age reform, only about 12% of the total workforce is presently covered by any social security system in India. Also, the cumulative annual pension budget worth Rs 65,000 crore of central and the state governments is presently growing at an alarming rate of over 20% per annum.?
Commenting on the new pension scheme (NPS) designed by PFRDA, Swarup said, ?The NPS will provide a hassle-free arrangement for individual participants.