SBI Pension Funds is planning a foray into alternative investment funds (AIFs), gold ETFs and silver ETFs, said its MD & CEO, Pranay Dwivedi. “We are actively looking at AIFs, but we will not blindly venture if the returns are not commensurate with the risk,” he said. The pension fund house, which manages Rs 5.7 lakh crore, aims to triple its assets under management over the next five to six years while maintaining its 34% market share in an industry projected to grow from Rs 16 lakh crore to Rs 45 lakh crore.
Beyond Traditional Bonds
Under the revised PFRDA guidelines, pension funds can now invest up to 5% of their corpus in alternate assets, including AIFs, REITs, InvITs, and gold and silver ETFs. Of this, SBI Pension Funds has earmarked 1% for AIFs and 1% for gold and silver ETFs, with the remaining allocation spread across REITs, InvITs, and other approved instruments. Dwivedi emphasises that the objective is not to chase high‑beta returns but to add stability and diversification. “The intent is not to benefit from the growth of gold and silver. The intent is to give stability to the portfolio,” he said, stating that globally, pension allocations to equities have fallen in favour of bonds and alternatives.
SBI Pension Funds currently has a modest 0.4–0.5% exposure to alternatives, largely through REITs, InvITs and asset‑backed securities. The AIF window, newly opened in January, will be tapped selectively. The team is evaluating both Category I and II AIFs across equity and credit strategies, but only where returns exceed existing portfolio yields by 300–400 basis points. “If a REIT gives me 12% and a credit AIF also gives 12%, I will prefer the REIT,” says Sandeep Pandey, CIO–Fixed Income, SBI Pension Funds. For him, the risk‑return equation is critical to justify investment in alternatives. The fund house has generated returns of 9.5%, around 140 bps higher than EPFO returns.
Demographic Urgency
Dwivedi draws attention to India’s demographic urgency, driving the need for pension planning. “India is at a critical demographic turning point. For years, we spoke about our demographic dividend, but the reality is that we are ageing much faster (than we are becoming rich). By 2047, our elderly population aged 60 and above will almost double—from 10% to nearly 20%—and without adequate financial security, no nation can truly call itself developed. That is why pension planning is not optional; it is essential. We need to build long‑term financial discipline today so that every Indian can retire with dignity tomorrow,” he said.
The pension fund house sees significant growth opportunities. It has expanded from 10 to 50 locations in just one year and is charting its next phase of growth on three pillars: expanding its physical presence, strengthening its digital channels, and deepening its corporate penetration.
“Corporate NPS is a major opportunity. While EPFO adds nearly 20 lakh employees every year, the total corporate NPS subscriber base is just 25 lakh. In this regard, we have not even scratched the surface,” added Dwivedi. SBI Pension Funds is currently the market leader overall but ranks third in the private‑sector NPS segment, an area it intends to grow aggressively. The fund house is also engaging with gig‑economy platforms to onboard informal‑sector workers into the NPS ecosystem.
The company is simultaneously investing in technology, risk management and product innovation. Under the new framework, SBI Pension Funds has launched two new schemes and is working on more persona‑based offerings tailored to different life stages and risk profiles. “We aim to remain the largest pension fund and reach out to the common people to create awareness,” Dwivedi added.