The Pension Fund Regulatory and Development Authority (PFRDA) has introduced significant reforms to the investment framework of the National Pension System (NPS), the Unified Pension Scheme (UPS), and the Atal Pension Yojana (APY). These updates are expected to offer subscribers wider diversification opportunities and potentially enhance long-term returns.
Under the revised guidelines, pension funds will now be permitted to invest in Gold and silver Exchange-Traded Funds (ETFs), giving investors indirect exposure to precious metals—an asset class traditionally known for stability during periods of inflation and market volatility.
In addition, PFRDA has approved investments in the Nifty 250 Index, expanding the equity allocation beyond large and mid-cap stocks to include a broader range of companies. This is expected to create a more balanced and diversified equity portfolio for pension subscribers.
Another major inclusion is permission to invest in Alternative Investment Funds (AIFs) – Category I and II, which include venture capital funds, infrastructure funds, and private equity investments. These asset classes are known for higher growth potential but also come with higher risk, offering a more dynamic range of investment choices.
According to PFRDA, these policy enhancements aim to strengthen long-term wealth creation for pension subscribers by moving beyond the traditional debt-equity model. Experts say this will make NPS a more attractive retirement planning tool, especially for younger investors seeking a diversified portfolio with exposure to multiple asset classes.
The updated rules are expected to be implemented soon, and detailed allocation guidelines for each asset class will be issued to pension fund managers.
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