Mumbai: Pension Fund Manager (PFMS) will soon be permitted to invest in initial public offering, and also on a broader list of shares, the top officials from the PFRDA sector regulator said on Tuesday.
The Pension Authority and Pension Development (PFRDA) aims to increase the number of customers who want to build a pension Corpus with 1 Crore on FY22 with increasing interest during the pandemic, the chairman Supratim Bandyopadhyay told reporters.
At present, there are limits where PFMS can invest the equity component of the corpus only in the script traded in the options and segments of futures with the market close more than Rs 5,000 Crore.
Officials said this limited opportunities for fund managers, who had been able to provide an annual growth rate to increase by 11.31 percent in equity investment since the beginning of the new retirement scheme.
They appointed supermarket Avenue as a case example, where PFMS cannot enter due to restrictions.
“In two or three days, we will notify new rules that take a more liberal view of the categories where equity investment can be made,” said Bandyopadhyay.
Under new rules, PFMS will be able to invest in IPO, follow-up public offers, offering for company sales.
And, the stock universe to be chosen will also be extended to the top-200 script traded in NSE and BSE, he said.
Bandyopadhyay emphasized that he was personally for more equity investment because of the return he had delivered.
There will be several specifications that will be brought to reduce the risks associated with equity investment, he said.
Replying to questions around the new company registration plan to come and the possibility of retirement money invested in a company that has not provided a profit, he said PFRDA believes to provide independence to the PFMS to choose.
Until now, the investment of equity has delivered a refund of 11.31 percent, the company’s debt has provided 10.21 percent and government securities of 9.69 percent.
The total number of NPS customers stands at 4.37 Crores until now, with a maximum of 2.90 crores under the Atal Pension Yojana.
“We are targeting to increase the customer base with 1 crore at FY22, which will include 90 lakhs for APY and the rest for other products,” Bandyopadhyay added that even though there was a second wave impact, he added 1.60 lakh customers in the first quarter.
, There are changes in the strategy when it comes to investment in the debt market, where PFM chooses for medium maturing profiles less than 10 years because there is no opportunity for profit sharing to fall further, he said.
Given free hands, 10 years of government security benchmark will harden 6.25-6.50 percent, he said.
PFRDA also tends to enable PFM to invest in debt papers issued by trust investment in real estate and infrastructure investment, he said.
Bandyopadhyay added that the budget announcement to include such securities in cases of bad debt resolution gives PFRDA’s trust greater to allow such size.
Meanwhile, PFRDA has also decided to allow withdrawal up to three times during a subscription to help an investor fulfill the issue of immediate liquidity, Bandyopadhyay said it added that the withdrawal would be limited to 25 percent.
However, he acknowledged that premature withdrawals did not help investors and could also defeat the purpose of investing.
Talking about future legislative changes, especially those carried out through amendments to the law during the ongoing Monsun Parliamentary session, he said there was a need for pension funds to be regulated by PFRDA.
It will also help investors through better tax treatment, Bandyopadhyay said.
The NPS scheme, which has seven PFMs, has opened a window on tap for new managers, Bandyopadhyay said adding that he hoped at least two entities had managed more than Rs 50,000 Corpus Crore to appear.
In addition, the application that has been received from the Mutual Fund axis is also in the process and the parent bank must get certain choices from the RBI before the same thing becomes operational, said Bandyopadhyay.
He also welcomed the government that allowed 74 percent of foreign investment directly in PFMS.
Bandyopadhyay said the RS 425 Crore has been invested by 85,000 customers through D-remedy facilities, which allows immediately capture the value of clean assets.