New Delhi: Pension Fund Regulatory and Development Authority (PFRDA) has widened the investment options for deploying funds to garner better returns.The pension fund regulator has now allowed pension funds to be invested in NIFTY 250 Index stocks not exceeding 25 per cent of the total corpus, the master circular dated December 10 said.
It has also permitted investments in gold and silver ETFs, giving pension funds the option to diversify into commodity investments.The regulator has also allowed investment in units of Infrastructure Investment Trusts (InvITs) regulated by the SEBI and investment in SEBI-Regulated 'Alternative Investment Funds' (Category I and Category II only), it said.
It further said that the sponsors of the alternative investment funds should not be the promoter in pension fund or the promoter group of the fund.Besides, it said, the AIFs should not be managed by investment manager, who is directly or indirectly controlled or managed by pension fund.
Commenting on the development, Amit Shetty, CEO of Embassy Office Parks REIT, said by widening investment choices for NPS subscribers to include high-quality debt, equity, infrastructure and real estate-linked instruments like REITs, the move will help channel long-term pension capital into productive Grade-A assets and support better retirement outcomes for millions of Indians.
"Pension-fund participation in Indian REITs and Invits strengthens the capital base for infrastructure and real estate, while advancing India's ambition to build deeper and more efficient capital markets. Their patient capital enhances yield stability and enables sustained, high-quality asset creation," said Shirish Godbole, CEO of Knowledge Realty Trust (KRT).
According to Gopal Jain, managing partner, Gaja Capital & Co-Chair, Regulatory Affairs Committee, IVCA the recent developments from PFRDA reflect a clear and steady vision for how India's pension architecture can support long-term value creation."The announcement of an NPS fund-of-funds marked a bold step towards giving retirement capital a structured, well-governed pathway into private markets. The updated Master Circulars build on that momentum by bringing clarity and consistency to the framework through which pension funds operate," he added.
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