Pension Fund Regulatory and Development Authority (PFRDA) will soon allow pension fund managers (PFMs) to invest in initial public offerings (IPOs), follow on public offers (FPOs) and offer for sale (OFS).
Speaking at an event, Supratim Bandyopadhyay, Chairman, PFRDA said these investments will be subject to terms and conditions.
"We will soon announce the investment guidelines. When it comes to IPOs, we will have some restrictions meaning that PFMs would be able to invest only in offers above a certain threshold," he added.
When it comes to PFMs, Bandyopadhyay said that Axis Mutual Fund which was to be added as a private sector pension fund manager is waiting RBI approval.
PFRDA has also permitted on-tap licenses for selecting PFMs. While he did not indicate exact numbers, Bandyopadhyay explained that the pension regulator is looking to select "a couple of new PFMs".
As of July 10, 2021, the total assets under management including Atal Pension Yojana and the flagship National Pension System (NPS) stood at Rs 6.2 lakh crore. In FY21, the AUM was at Rs 5.78 lakh crore.
Going forward, Bandyopadhyay said a slew of changes are expected in this sector. These include systematic withdrawal plan (SWP) and minimum assured returns scheme.
SWP or payout within the funds would give additional options to subscribers since these individuals can decide whether to opt for annuity plans or for SWP. This will be available once the PFRDA Amendment Bill is passed.
Additionally, the pension regulator is planning a Minimum Assured Returns Scheme for customers with a lower appetite for risk.
Bandyopadhyay said the scheme is under works and within the next few weeks, an actuarial firm will be chosen under the Request-for-Proposal (RFP) process. Currently, the National Pension System (NPS) give returns annually, based on prevailing market conditions.
On the NPS front, he explained that the Direct Remittance (D-Remit) scheme has seen good traction. As of July 19, a total of Rs 425 crore was collected from this initiative which was launched on October 1, 2020.