Pension Fund Administration’s Guaranteed Return Scheme in Final Stage

The PFRDA provides the final touch to the guaranteed return investment plan within the framework of the National Pension System (NPS) architecture, while retaining the option of offering a fixed minimum return or comparing it to a rate in real time, said a senior official.

The Pension Funds Regulatory and Development Authority is expected to finalize the product by the end of this month. However, the launch could take a few more months, said PFRDA Chairman Supratim Bandyopadhyay.

“We had two or three rounds of discussions with pension fund managers, the EY team and members of our expert committee. We gave shape to this. [product], most of the time the final shape will be made by the end of September. The launch will take some time as it requires a lot of system-related development as it is a brand new type of system,” Bandyopadhyay said. PTI in an interview.

As the name suggests, the scheme aims to provide a guaranteed minimum return to investors. However, the regulator has not yet decided on the quantum.

“We’re keeping that option open. It could either be some sort of x percentage fixed return, or it could be tied to a real-time benchmark, say the one-year treasury or something. So, both things are open,” he said.

More than 10% return

Over a 13-year period, the PFRDA has generated an average return of over 10% on pension plan investment.

Mr Bandyopadhyay said: “We will try to put the regime in place during this exercise. There is interest in the market for this type of diet product and it will give visibility to the existing diet…markets are always volatile. Maybe two years ago it was COVID, tomorrow it may be something else.” In a volatile market, giving some kind of guarantee was also difficult, but despite this, PFRDA aimed to offer this type of product to its subscribers. , did he declare.

Answering the question of why one should choose assured return if in the normal course it offered a rate above 10%, he explained that there were different patterns in people’s investment behavior.

Many people in the upper age bracket may think they have reached a stage that is not worth taking a risk in a volatile market.

The average of more than 10% delivered in the past over a decade may decline and market-linked returns offer no guarantees, so the assured return proposition may be promising for investors.

The PFRDA offers two flagship pension schemes: the NPS and the APY. While the NPS caters to employees in the organized sector, including central and state governments, the Atal Pension Yojana (APY) caters to the retirement needs of those working in the country’s unorganized sector, which represents the key to job creation in the country. country.