Finance Ministry to look into raising equity investment proposal: Pension fund regulator

Pension funds regulator has said that finance ministry will look into the proposal of increasing the investment of pension funds in the equity market up to 50 percent of the corpus from the current 15 percent.

New Delhi: Finance Ministry will go through the proposal seeking a hike in the investment limit of pension funds by up to 50 per cent and then refer the matter to an expert committee, the pension fund regulator has said.

"We are discussing it. They (Finance Ministry) will go through it and then probably refer it to somebody (committee or expert group) to increase investment limit of pension fund into equity market," The Pension Fund Regulatory and Development Authority of India (PFRDA) chairman Hemant G Contractor told PTI.

PFRDA has sought approval of Finance Ministry to raise the limit of government employees' pension funds in the stock market up to 50 per cent.
Currently, the pension funds under PFRDA is allowed to invest up to 15 per cent of the corpus into stock market.

Contractor said state and central government employees should be allowed to invest more in equity market.
"They should also get the same exposure to the stock market as the employees of private sector get which is at 50 per cent," he added.

The raise in investment limit into equity market is one of the recommendations of the G N Bajpai committee stating the investment of pension funds into stocks market should be enhanced.

PFRDA had set up an expert panel under the chairmanship of ex-Sebi chief G N Bajpai to review investment guidelines for National Pension System (NPS) schemes in private sector.

Contractor said equity in the long run is always better performing than other instruments.
The Bajpai committee has recommended diversifying investment portfolio of NPS scheme into private equity and venture capital funds.

PFRDA regulates NPS which is subscribed by employees of both central and state governments, besides private institutions and unorganised sectors.
At present, NPS funds can be invested in government securities, corporate bonds and equities.

The Centre had introduced the New Pension System (NPS) in January 2004.
Total assets managed under NPS are about Rs 82,000 crore, while the private sector's contribution is just Rs 5,000 crore.