Maintaining NPS return at over 10% to be examined: Contractor

Maintaining NPS return at over 10% to be examined: Contractor

Maintaining NPS return at over 10% to be examined: Contractor

Pension Fund Regulatory and Development Authority of India (PFRDA) Chairman Hemant Contractor has called for examining sustainability of high returns of over 10% to government employee NPS subscribers at a time when interest rates are in decline.

SBI Pension Funds, UTI Retirement Solutions and LIC Pension Fund Ltd are the three government-managed pension funds hired by the PFRDA that offers returns in the range of 10.16-10.52% to central government employees.

For the state level, the interest rate falls in the range of 10.16-10.31%.

"On the sustainability of returns, we have been talking to the government because now the interest rates are coming down. So, the returns that we get on debt instruments would come down," Contractor told reporters here. "Therefore, we do need to look at instruments like life cycle funds in order to broadbase the investment and get better returns. We do need to restructure."

It is to be noted that for 2016-17, the retirement fund body Employees Provident Fund Organisation (EPFO) had lowered the interest rate to 8.65%, from 8.8% in the previous fiscal.

The PFRDA has a total of eight fund mangers that manage pension funds.

The private funds are ICICI Prudential Pension Fund Management, Reliance Capital Pension Fund, Kotak Mahindra Pension Fund, HDFC Pension Fund Management Co Ltd and Birla Sun Life Pension Management Ltd.

As on March 31, the total asset under management (AUM) by all these fund managers stood at Rs 1.75 lakh crore, which grew to Rs 2.06 lakh crore as on September 30.

According to Contractor, the subscriber base of the pension schemes run by the PFRDA has been growing, mainly driven by growth in user base every day.

The overall subscriber base of the pension regulator was 1.81 crore as on October 31. There were 1.54 crore subscribers by the end of fiscal ended March 2017.