Pension regulator PFRDA has increased the cap on equity investment in active choice by private sector subscribers of the National Pension System to 75 per cent from 50 per cent. However, this comes with a rider — the equity allocations are tapered after the age of 50. The tapering would be to the extent of 2.5 percentage points every year, for 10 years. This decision was ken by the board of PFRDA, and would not require government approval.
At present, the NPS’ total private sector scheme assets under management stands at ₹27,900 crore.
The PFRDA has also given its nod for a change in the investment grade rating from ‘AA’ to ‘A’ for corporate bonds. However, pension funds cannot invest more than 10 per cent of their overall corporate bond portfolio in ‘A’ rated bonds. This initiative will enlarge the scope of investment for fund managers while ensuring credit quality.
The PFRDA has now also allowed partial withdrawal for NPS subscribers who wish to improve their employability or acquire new skills by pursuing higher education/acquiring professional and technical qualifications.
Further, individual NPS subscribers who wish to set up or acquire a business will also be allowed to make partial withdrawals from their contributions. Other terms applicable to partial withdrawals will remain unchanged.
It may be noted that the government had recently announced that the NPS subscribers can partially withdraw funds after 3 years from the date of joining it as against the earlier norm of 10 years from the date of joining the system.