PFRDA Changed Investment Guidelines for Pension Fund

The Pension Fund Regulatory and Development Authority (PFRDA) changed the investment guidelines for pension fund on 17 October 2013.

The following changes made in the investment guidelines for Pension Fund by PFRDA

• Investments in debt securities by pension funds should have residual tenure of not less than three years
• Debt securities selected for investments should have a minimum residual maturity period of three years from the date of investment by the Pension Fund.
• The debt securities must have an investment grade rating from at least two credit rating agencies. Apart from ratings by agencies, pension funds should undertake their own due diligence of assessment of risk associated with securities before investments.
• Credit Default Swaps (CDS) on corporate bonds are also eligible derivative instruments
• Rated asset backed securities (ABS) are eligible securities for investments provided they have a residual maturity of not less than three years and have an investment grade rating from at least two rating agencies.

It also explained that both National Pension System (NPS) Lite and private sector schemes follow the government pattern of investment and hence investment guidelines as applicable to the government sector and any subsequent amendments to investment guidelines of government sector will be applicable to these schemes as well.

Fund managers for managing pension corpus of government employees

• LIC Pension Fund Ltd
• SBI Pension Funds Pvt. Ltd
• UTI Retirement Solutions Ltd

Fund managers for managing pension corpus of Private sector employees

• LIC Pension Fund Ltd
• SBI Pension Funds Pvt. Ltd
• UTI Retirement Solutions Ltd
• HDFC Pension Management Company Ltd
• ICICI Prudential Pension Funds Management Company Ltd
• Kotak Mahindra Pension Fund Ltd
• Reliance Capital Pension Fund Ltd
• DSP BlackRock Pension Fund Managers Pvt Ltd

About Pension Fund Regulatory and Development Authority (PFRDA)

• The Pension Fund Regulatory and Development Authority was established by the Government of India on 23 August 2003.
• The main objective of the PFRDA is to promote old age income security by establishing, developing and regulating pension funds, to protect the interests of subscribers to schemes of pension funds and for matters connected therewith or incidental thereto.
• The PFRDA shall consist of a Chairperson and not more than five members, of whom at least three shall be whole-time members, to be appointed by the Central Government.