Private sector subscribers to National Pension System (NPS) would get the much-awaited facility of opting for maximum equity exposure of 75 per cent under the active choice by this month end, a top PFRDA official said.

“There were some technical issues (at the end of CRAs). We have sorted them out and they (CRAs) have said it would be available from this month end,” Hemant Contractor, Chairman, PFRDA told BusinessLine here.

Contractor said this facility would get operational by the end of this month.

“There is no issue about approvals. The PFRDA board has already given the nod,” he added.

It may be recalled that the Pension Fund Regulatory & Development Authority had earlier this year increased the cap on equity investment in active choice by private sector subscribers of NPS to 75 per cent from 50 per cent.

The earlier 50 per cent equity cap was seen to be too low for young workers who dominate the NPS subscriber base.

Currently, the private sector NPS corpus stands at about ₹38,000 crore. Since 2009, the year of private sector NPS launch, the funds invested in equities have given an average annual return of 11 per cent. While monies invested in corporate bonds have given a return of 8 per cent, those invested in G-Secs gave a return of about 7 per cent.

Total subscriber base

Currently, NPS has a total subscriber base of 2.26 crore with total corpus of ₹2.57 lakh crore. In 2017-18, NPS corpus grew a whopping 37 per cent.

About 82-83 per cent of the total corpus came from Government-NPS, which was launched in 2004.

Contractor said that all the States except West Bengal have adopted NPS. “Till recently, only two States were out of NPS. Tripura has also joined NPS from July 1 becoming the 28th State to do so. The only State that is still out of NPS is West Bengal,” he said.

Contractor said pension monies have now started to flow into ‘A’ credit-rated corporate bonds.

The PFRDA had, post this year’s Budget announcement, given its nod for a change in the investment grade rating to ‘A’ from ‘AA’ for corporate bonds.

However, pension funds cannot invest more than 10 per cent of their overall corporate bond portfolio in ‘A’ rated bonds, the pension regulator had stipulated.

This initiative was expected to enlarge the scope of investment for fund managers while ensuring credit quality.

CABs & SABs

Contractor said there has been a good response from both Central Autonomous Bodies (CABs) and State Autonomous Bodies (SABs) to NPS. In fact, the SABs are showing much better response, he said.

In 2017-18, as many as 272 SABs joined NPS and in the first four months of this fiscal about 40 SABs have joined, he said. In 2017-18, the total number of CABs joining NPS stood at 27 and in the first four months this fiscal about 11 have joined.

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