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| Edited By: DNA Web Team |Source: DNA Web Desk |Updated: Sep 05, 2022, 07:41 AM IST
PFRDA is finishing up the NPS architecture's assured return investment plan while leaving open the possibility of offering a predetermined minimum return or benchmarking it to a real-time rate.
The Pension Fund Regulatory and Development Authority is most likely to give the final shape to the product by the end of this month. However, the launching may take another few months, PFRDA Chairperson Supratim Bandyopadhyay said.
“We had two-three rounds of discussions with the pension fund managers, the EY team along with our expert committee members. We have given some kind of a shape to that (product), mostly the final shape will be done by the end of September. The launch will take some time because it requires a lot of system-related developments as it is a new kind of scheme altogether," Bandyopadhyay told PTI in an interview.
Investors will receive a minimum guaranteed return as part of the scheme. The regulator hasn't made a decision regarding the quantum yet, though.
“We are keeping that option open. It could be either a sort of a fixed return of x percentage or it could be related to a real-time benchmark, say the one-year treasury bill or something like that. So, both things are open," he said.
On the pension schemes investment, PFRDA has given an average return of more than 10 percent over a period of 13 years.
The PFRDA chairperson stated that the scheme will be ready more or less by the end of September, but it will take a few months to launch.
“We will try to bring in the scheme within this fiscal year. There is an interest in the market for this kind of scheme product and it will give visibility to the existing scheme...Markets are always volatile. Maybe two years back it was COVID, tomorrow it can be something else."
Giving any kind of guarantee in a volatile market is challenging but despite that PFRDA aims to offer its subscribers this kind of product, he said.
He explained there are different patterns in investment behaviour of the people while countering the question as to why one should choose for assured return if in normal course it is delivering over 10 per cent rate.
Many older individuals might believe that they have reached a point where taking a chance in a turbulent market is not worthwhile.
The average annual return of over 10% during the previous more than ten years has the potential to decline, and market-linked gains are not guaranteed, so investors may find the promise of an assured return attractive.
PFRDA offers two flagship pension schemes -- NPS and APY. While the National Pension System (NPS) caters to the employees in the organised sector including the central and state governments, the Atal Pension Yojana (APY) fulfil the pension needs of those working in the unorganised sector of the country which accounts for the bulk of employment generation in the country.
