Pension fund regulator PFRDA will soon allow subscribers of the National Pension System (NPS) scheme to change investment pattern as many as four times during a financial year as there has been a demand to increase the limit, its chairman Supratim Bandyopadhyay said Tuesday.

Currently, NPS subscribers are allowed to change the investment pattern twice in a financial year. “One can change the investment choice twice in a year. Now, in a very short period of time, we are going to increase.

The only cautionary note PFRDA wants is that it is a long-term investment (product) to build a pension corpus, and it should not be treated akin to a mutual fund scheme, he said.

“People sometimes mix it up with some mutual fund kind of thing that can give good returns. You have to give it some time and thereafter, only you can use it (changing option). Use it judiciously, we are going to increase it to four times in a year (financial year),” Pension Fund Regulatory and Development Authority’s chairman said.

Subscribers are allowed to allocate their investments in a mix of instruments such as government securities, debt instruments, asset-backed and trust-structured investments, short-term debt investments, and equities and related investments.

However, there are different rules for different sets of subscribers. For instance, government sector employees cannot have high exposure towards equities, while the corporate sector employees are allowed to allocate as much as 75% of asset towards equities.

Separately, subscribers are also allowed to change fund managers once in a year. Fund managers invest subscribers’ pension assets in the prescribed investment schemes, as per choice.

Currently, pension fund managers under NPS are – ICICI Prudential Pension Funds Management Company, LIC Pension Fund, Kotak Mahindra Pension Fund, SBI Pension Fund, UTI Retirement Solutions, HDFC Pension Management Co, and Birla Sun Life Pension Management.

The PFRDA chairman said the Insurance Regulatory and Development Authority of India (Irdai) has made a working committee and a report has also been submitted by the committee.

“We are in discussion with Irdai to ensure that those kinds of products are released as quickly as possible,” he added.

 

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