PFRDA changes investment norms in NPS schemes for govt sector

Pension fund regulator PFRDA has changed investment guidelines for NPS schemes applicable to government sector raising investment cap in debt and related instruments by 5 per cent to 45 per cent.
As per the new guidelines of the Pension Fund Regulatory and Development Authority (PFRDA) investment allocation in the Government Securities and related investments has been reduced from 55 per cent to 50 per cent.
No change has been made in equity or related investments cap of 15 per cent.
The new guidelines will come into effect from June 10.
Also, a new asset class has been introduced by allowing investment in 'Asset Backed, Trust structured and miscellaneous investments' in which pension funds could invest up to 5 per cent.

The segment include commercial mortgage based securities or residential mortgage based securities, units issued by REITs or Infrastructure Investment Trusts regulated by the SEBI and asset backed securities regulated by the capital markets regulator.

"Introduction of new asset class is a welcome move which is in line with recommendation of the Bajpai committee report released in April 2015," said Divya Baweja, Partner, Deloitte Haskins & Sells LLP.
PFRDA said the instructions supersede only part of investment guidelines for NPS schemes applicable to government sector, Corporate CG and NPS Lite schemes.
"Investment guidelines for NPS private sector will be unchanged till further orders," it added.

Baweja said that it would be "interesting to see" to what extent the PFRDA amends NPS investment guidelines for the private sector.