To boost maximise returns from the retirement corpus under the National Pension System (NPS) and Unified Pension System (UPS), the Pension Fund Regulatory and Development Authority (PFRDA) has allowed pension fund managers (PFMs) to expand the investment universe to include gold and silver exchange traded funds and expand investment to the top 250 listed firms from 200 for equity exposure.
The pension regulator issued revised investment guidelines for both the government sector and the non-government sector on Wednesday to further align the norms with subscriber appetite for higher returns while balancing the risks.
NPS’s assets under management (AUM) for both the government and non-government sector stood at Rs 16.46 lakh crore as of November 30, 2025.
New Allocation for Precious Metals
According to the revised norms, for the government sector – UPS/NPS/APY Schemes subscribers, a new sub-category was introduced under “Asset Backed, Trust Structured and Miscellaneous Investments” (Category v) to allow investment in Units issued by Gold and silver ETF regulated by SEBI. The aggregate investment in Gold and silver ETFs is limited to 1% of the respective Scheme AUM.
For private sector subscribers, the PFRDA allowed investment in units issued by Gold and Silver ETFs regulated by SEBI. Provided that the aggregate investment under Units of REITs, Equity-oriented AIFs, and Gold, Silver ETF did not exceed 5% of the scheme.
Both Gold and Silver ETFs have delivered exceptional returns in the past year, reflecting the global rally in precious metals. Some sources indicate average returns over 50% for both categories over a 1-year period.
Similarly, the regulator also allowed both the government and non-government sector subscribers to invest in the top 250 listed company stocks, up from the top 200 earlier, increasing the scope for return maximisation.
Simplified Debt and Credit Rating Requirements
PFRDA also simplified debt investment norms for the government sector. Investment in listed Basel III Tier-1 bonds was expanded to include those issued by All-India Financial Institutions (AIFIs) and Government-owned Non-Banking Financial Companies (NBFCs), in addition to scheduled commercial banks. Giving flexibility in credit rating, it inserted a new provision allowing pension funds to invest up to 10% of the total debt instruments portfolio in securities with an AA rating or above that are rated by a single rated agency registered with SEBI.
For debt securities issued by Real Estate Investment Trusts (REIT) and Infrastructure Investment Trusts (InvIT), the requirement for the Sponsor of the Trust to have an ‘AA’ or equivalent rating was removed. Only the requirement for the Trust itself to be rated ‘AAA’ or equivalent remains.