Pension Fund Regulatory and Development Authority expects to receive the board approval for its minimum assured product in the next 7-10 days, Chairperson Supratim Bandyopadhyay said on Friday.

The minimum assured return scheme (MARS) will have a fixed rate of return, which will be reviewed annually and may be linked to the government securities, Bandyopadhyay said, adding that the product will have a tenure of 10 years.

Despite the regular National Pension System (NPS) reporting good returns, investors in India favour products with assured returns, which is why PFRDA decided to launch such a product, he said.

Since inception, the equity plan of NPS has given a return of 12.3 per cent, corporate bonds 9.2 per cent and government securities 8.7 per cent. The central government scheme has given returns of 9.4 per cent, the state government scheme 9.3 per cent and Atal Pension Yojana (APY) of 8.8 per cent, data showed.

NPS portfolio

Of the NPS portfolio, 51 per cent of the investments are in government securities, 17 per cent in equity, 27-28 per cent in corporate bonds and the remaining in money market instruments, Bandyopadhyay said.

Assets under management, including both NPS and APY, stood at ₹8.5-lakh crore for the nine-month period ended December 31. This was up 22.1 per cent on year or ₹1.5-lakh crore in absolute terms--higher than the increase of ₹1.3-lakh crore seen for the whole of FY22.

Bandyopadhyay said that PFRDA had initially expected to cross the ₹10-lakh crore mark this year but due to unforeseen global events and market volatility, the accretion has been lower, and he expects the AUM to cross ₹9-lakh crore in FY23.

He added that work regarding the creation of the self regulatory organisation (SRO) for pension funds is already underway and that the industry body is expected to be set up in another month.

Further, the regulator will also open the window for on-tap licence for pension fund managers for one month from April 1 onwards, Bandyopadhyay said, adding that while the regulator has no specific number of fund managers in mind, it has tightened the eligilibity criteria to ensure that only long-term players enter the business.

Asked on expectations from the Budget, scheduled to be announced on February 1, Bandyopadhyay said that PFRDA has sought for an additional increase of ₹50,000 in the limit for tax deduction on investments under NPS.

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