NPS Update: PFRDA coming up with NEW GUIDELINES related to equity investment - Now pension fund managers can invest in IPOs, FPOs and OFS

After the new investment guidelines, pension fund managers will be able to invest in IPOs, FPOs and offer for sale of companies. Apart from this, the scope for investing in pension funds will also increase and fund managers will be able to invest in companies of BSE 200 and NSE 200.

Now pension fund managers can invest in IPOs, FPOs. Image Source: Reuters

If you invest in NPS for your retirement fund and pension, then there is good news for you. Now people will get more return on investments. PFRDA, the regulating body of the National Pension System (NPS), is coming up with new guidelines related to equity investment.

After the new investment guidelines, pension fund managers will be able to invest in IPOs, FPOs and offer for sale of companies. Apart from this, the scope for investing in pension funds will also increase and now fund managers will be able to invest in companies of BSE 200 and NSE 200.

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After the new rules, the equity share of pension funds will increase and the subscribers will get a higher return on investment.

According to Supratim Bandyopadhyay, Chairman of PFRDA, the equity guidelines for fund managers have been prepared and now the scope of equity investment will increase and pension fund managers will be able to invest in companies of BSE 200, NSE 200 and the upcoming big IPOs.

PFRDA believes that there is risk in equity investment but there is potential for higher returns too. So far NPS has given a return of 11 percent in equity and at present, investment of 1 lakh crore is present in equities through pension funds and after the new rules it will increase.

FDI limit has also been increased from 49 percent to 74 percent through changes in PFRDA Act, after which existing 7 pension fund managers can sell their stake to foreign partners and for the new fund managers coming via On Tap Licence also the foreign investment limit will be 74 percent.

After the increased FDI limit the inclination of foreign investors towards pension funds will increase and gains in the long term will be observed.

At present, 4.37 crore subscribers are connected through NPS and a target has been set to add 1 crore new subscribers in the current year. After the change in the KYC rules, now it has become very easy to open an NPS account by doing KYC through Aadhaar and NPS account can be opened in few minutes through online medium.

If you want to withdraw money from your NPS fund during the corona period, then you do not need any kind of document and you can withdraw 25 percent of your contribution by self-declaration.

According to Supratim Bandyopadhyay, documents related to home, marriage, medical are not required for partial withdrawal and through self-declaration subscribers can withdraw money without any problem.

Apart from this the retirement withdrawal limit has been increased from Rs 2 lakhs to Rs 5 lakhs i.e. if the pension fund amount is less than Rs 5 lakh then the subscribers are allowed to withdraw the entire amount without purchasing any annuity.

While investing in NPS, the customer used to get the NAV recorded in the customer's account after two days, due to which the investor had to suffer because of market fluctuations, but through the D-Remit facility, the option of getting the NAV on the day of investment has been given. Under this if you contribute by 9:30 am then you will get the NAV of that day. So far, 85 thousand subscribers have invested 450 crores through D-Remit facility.

Supratim Bandyopadhyay believes that after the new bill proposed in the monsoon session of Parliament, pension funds which are not under the regulatory authority at present will come under PFRDA, but whether there should be a regulator for all pension funds or not, only the central government can decide.

NPS investment is also associated with risk due to investment in equity but in view of better returns, the maximum share of equity investment has been gradually increased, earlier government employees could invest only a maximum of 15% in equity but now 50% equity investment has been approved and private sector employees can invest up to 75% in equities.

To boost investor confidence in NPS, RFP for Minimum Return Product has been issued, talks with insurance regulator IRDAI on linking with variable annuity inflation is also in process.

In order to maximize the reach of NPS, the regulator has recently allowed individual NPS agents. In the coming days, the sale of NPS products may also be approved through life insurance companies.

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PFRDA National Pension System (NPS)