The Hindu Business Line : Pension fund managers shun market

Mumbai, Nov. 22 The fund managers of the New Pension Scheme for government employees appear to be prudent as they invested only less than one per cent of their total corpus in the risky equity market, against up to five per cent allowed.

The fund managers – SBI, LIC and UTI – together invested a small sum of Rs 5.63 crore in equities so far out of total Rs 1,602 crore under their management. The major chunk of the money has been invested in the more secure government securities, PSU bonds and other approved securities.

The funds had been allotted to them on April 1, 2008 under a competitive bidding process based on the fees quoted by them. SBI has the largest share of Rs 842 crore followed by UTI with Rs 678 crore and LIC Rs 82 crore.

As a percentage of funds under management, SBI has the lowest exposure in stocks with 0.045 per cent, followed by UTI (0.71 per cent) and LIC (0.54 per cent), according to information available with fund managers.

The three fund managers had been appointed by the pension regulator to manage the pension funds of the Central and State Government employees joined the service from January 1, 2004. They are expected to report the funds’ performance to the New Pension Scheme (NPS) Trust.

Return on investment

According to a presentation made by the fund mangers to the NPS Trust on Friday, the annualised return of their investments ranges from 8.63 per cent to 9.03 per cent. In fact, they need to achieve a minimum 5 per cent real rate of return (after adjusting for inflation) to ensure that the employees get a pension equal to the 50 per cent of their last drawn salary, after 30 years.

SBI Pension Fund has invested most of the money into long-term securities including the “AAA” rated securities, said a source.

An official with LIC Pension Funds said the company, which has completed one year, has submitted its annual report and investment details to the review meeting of the NPS Trust on Friday in New Delhi.

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