NPS, PFRDA alert! FDI limit in pension funds raised from 49% to 74% - Check details

The government has issued a notification to raise the FDI limit in pension funds from 49 percent to 74 percent.

FDI limit in pension funds raised from 49% to 74%. Image: PTI

After increasing the Foreign Direct Investment (FDI) in insurance from 49 percent to 74 percent, the government has now issued a notification to increase the limit of FDI in pension funds from 49 percent to 74 percent and has named it as PFRDA Regulation 2021.

To increase the scope of pension in the country, new On-tap Pension Fund Managers licenses will be issued and with the new announcement, big companies will have a chance to enter the pension business. The FDI limit for new On-tap Pension Fund Managers license will be 74 percent.

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As per the information, now the present fund managers will also be able to sell their stake to foreign investors.

National Pension System (NPS) was launched in January 2004 for government employees and later in 2009 it was opened to all. There are two types of accounts in NPS - Tier 1 and Tier 2. If a person invests in Tier 1 account then he/she gets an additional tax exemption of up to Rs 50,000. National Pension Scheme is being regulated by PFRDA.

7 Pension Funds in NPS:

1. HDFC Pension Management

2. ICICI Pru Pension Funds Management

3. Kotak Mahindra Pension Fund Management

4. LIC Pension Fund

5. SBI Pension Funds

6. UTI Retirement Solutions

7. Aditya Birla Sun Life Pension Management

The benefit of FDI in Pension Funds:

1. Many companies need capital for their expansion and due to the increase in FDI limit they will get more money.

2. Existing fund holders will also be able to sell their excess stake.

3. Foreign companies will be able to provide new products, technology.

4. Help in increasing the reach of pensions.

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pension funds National Pension Scheme