The Hindu Business Line : PF authority okays investment in stocks

New Delhi, Nov. 27 The Pension Fund Regulatory and Development Authority (PFRDA) has given its nod for investments up to 5 per cent of the funds under the new pension system (NPS) in stock markets and another 10 per cent in equity linked mutual funds.

The PFRDA has also said that SBI, UTI Mutual Fund and LIC, who have been appointed as the fund managers for a period of three years, will start managing the Rs 2,000-crore corpus from June next year.

“We have formally signed an agreement with the National Securities Depository Ltd (NSDL), appointing it as the Central Recordkeeping Agency (CRA) for the NPS, for all Government employees recruited from January 1, 2004, except the armed forces,” PFRDA Chairman, Mr D. Swarup, told reporters here on Tuesday.

He added that the fund managers would also offer an option to employees to invest 100 per cent of their pension funds in Government securities which give assured returns.

Expected growth

Around 1-lakh employees are expected to join the scheme annually and the pension fund is also expected to grow by about Rs 1,000 crore each year.

SBI would manage 55 per cent of the total corpus as the bank bid the lowest fund management cost of 3 basis points. UTI will get 40 per cent and LIC the remaining 5 per cent of corpus. Both will have a fund management cost of 5 basis points.

Mr Swarup also said that once the PFRDA Bill, which is pending in Parliament since March 2005, gets approval, the regulator would offer the employees more options, including investments of up to 50 per cent in stock markets, and also allow private sector employees to join the scheme.

Bearing the expense

“The Central Government has agreed to bear all the expenses of NSDL, which includes Rs 350 annual charges per account, Rs 50 one-time charge, and Rs 10 per transaction. NSDL will issue Permanent Retirement Account Number (PRAN) on the pattern of PAN card to each pension account holder, provide annual statements and act as an operational interface between PFRDA and fund managers,” he said.

“NSDL has been appointed the CRA for 10 years, and will also set up call centres to provide information to the account holders,” NSDL Chief Managing Director, Mr C.B. Bhave, said.

More Stories on : Pension Plans | Investments | Social Security

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page