The Pension Fund Regulatory and Development Authority (PFRDA) is lobbying the government to allow the National Pension Scheme (NPS) to invest more money in the stock markets. Government employees may get to invest 50% savings in stocks while the regulator mulls raising the cap to 75% for private-sector savers, reports Bloomberg.
"We are pressing the government to increase the equity proportion for government employees, and expect a favourable response very soon " from the Finance Ministry, said Mr Hemant Contractor, PFRDA chairman in an interview with Bloomberg. The current ceiling for government employees is 15%.
Government employees contribute about 87% of the INR2.3 trillion (US$34 billion) overseen by the NPS.
With interest rates trending lower, “equities, if managed properly, should provide that extra bit” of return, Mr Contractor said.
Aside from the NPS, the government operates the Employees’ Provident Fund Organization (EPFO), which offers investors defined returns on savings. Mr Contractor said that the PFRDA has pressed for legislation allowing workers to shift from that plan to the NPS. The EPFO won approval last year to raise its equity exposure limit to 15% from 10% previously, increasing competition for NPS.
Meanwhile, the World Gold Council is pitching gold as a permissible asset class for the NPS. Currently, the PFRDA, permits investments in corporate bonds, government debt and others like alternative investment funds (AIFs), and real estate investment trusts (REITs).