Pension funds of India will now be allowed to invest in select listed companies and IPOs. Pension Fund Regulatory and Development Authority (PFRDA) Chairman Supratim Bandyopadhyay said that pension fund managers will now be allowed to invest in India’s top 200 listed companies and IPOs.
At present, pension funds are allowed to invest in only those companies whose market cap is more than Rs 5000 crore and which are also in futures options (F&O). However, now the regulator is going to allow fund managers to invest in the top 200 listed companies.
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Bandyopadhyay said that for this the regulator will set some parameters for the IPO. He said that the Systematic Withdrawal Plan (SWP) instead of annuity after maturity from the National Pension System is part of the existing PFRDA Bill in Parliament. To implement this SWP, the fund house is being given the freedom to increase the scope of investment.
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what is the current rule
At present, NPS subscribers have to put 40 per cent of their corpus in annuity. A lump sum amount can be withdrawn from the plan after the maturity of the plan at the age of 60 years. But according to the new plan of PFRDA Bill, pensioners can withdraw money according to their need.
Apart from this, the government can also make PFRDA the regulator of the superannuation fund. At present there is no regulator for this fund. Superannuation fund is a type of retirement fund run by corporates. For this there are certain rules set by the Income Tax Department. However, now the government is considering to make PFRDA its regulator.
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After getting regulatory power to PFRDA, it will demand documents related to this from companies. PFRDA will examine whether the companies are following the guidelines of the Finance Ministry. If those companies do not follow the set guidelines, then their superannuation fund will be transferred to NPS and it will become part of the NPS system.
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