- NPS equity cap for government staff may be raised to 50%
- For private sector employees, it may be raised to 75%
- This will boost the domestic stock markets
India's equity culture may also get a boost from a stewardship code to be rolled out for the country's fund managers to push for corporate-governance best practices. The PFRDA, along with India's insurance and securities regulators, is pursuing the new code, Mr Contractor said in New Delhi Friday.
Government employees contribute about 87 per cent of the Rs 2.3 lakh crore ($35 billion) overseen by the NPS, which started in 2004 and later opened to all citizens for voluntary contributions. Aside from the NPS, the government operates the Employees' Provident Fund Organization, which offers investors defined returns on savings. Mr Contractor said his agency has pressed for legislation allowing workers to shift from that plan to the NPS.
Pension funds from Japan to Australia have taken on greater risk over time, conferring increased volatility. Norway's sovereign wealth fund said April 27 it lost $21 billion in the first quarter thanks to the global sell-off in equities. In India, appetite for risk may be less in a country where the 1.3 billion population doesn't have social security coverage, and where savings have declined as a share of the economy from a peak a decade ago.
Mr Contractor saw less need to expand the cap on investment in corporate bonds, which is currently set at 40 percent of the portfolio. He said there's just not enough issuance in the market to make it more attractive. He also ruled out investing in overseas markets for some time to come, given the likelihood of better returns at home.
The assets overseen by the NPS are managed by the following: LIC Pension Fund Ltd. SBI Pension Funds Pvt. Kotak Mahindra Pension Fund Ltd. Reliance Capital Pension Fund Ltd. Birla Sunlife Pension Management Ltd. HDFC Pension Management Co. Ltd. ICICI Prudential Pension Funds Management Co. Ltd. UTI Retirement Solutions Ltd.
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