new Delhi. Pension Fund Regulatory and Development Authority (PFRDA) President Supratim Bandopadhyay said that the authority is preparing to introduce a pension scheme with minimum return guarantee. He said that the Pension Authority is in talks with pension funds and actuarial firms in this regard. Based on this interaction, the proposed plan will be outlined. He said that under the PFRDA Act, we are allowed to start a minimum assured return scheme.
Under pension fund (PF) schemes, managed funds are market based. So there are obviously some ups and downs and valuations are based on market movements. Bandopadhyay said that there might be some people who would like minimum assured returns. We are therefore working with our pension fund managers and some actuarial firms to determine the ideal level of minimum guarantee that can be given. Despite this, he said, the guarantee would be linked to the market as the fund managers would have to decide the guaranteed portion of the return on investment.
When asked if PFRDA will offer this scheme in the current financial year, he said that we will try. This is a product that we are making ourselves. Bandopadhyay said that if you will see NPS and Atal Pension Yojana are products which have been prepared by negotiating with the Ministry of Finance.
This will be its first product by PFRDA. Actuarial will play an important role in this as we are not a guarantee provider for anything in our existing products. Whatever returns we get from the market, we pass it on to the customers. Here the investment risk is borne by the consumers only.
PFRDA manages two government pension fund schemes NPS and APY. NPS covers government employees (center and state), autonomous institutions and corporate organizations, while APY covers unorganized sector employees.
Pension fund managers invest money in diverse portfolios, including government bonds, bills, corporate debentures and shares. APY caters to the needs of people who do not have the benefit of any social security scheme and are not even income tax payers. Members of this scheme receive minimum pension ranging from Rs 1000 to Rs 5000 at the age of 60 years.
This post was published on August 31, 2020 9:46 am
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