PFRDA

PFRDA

Subject: Economy

Context: India’s pension funds will soon be allowed to invest in select publicly listed companies and initial public offerings, the sector regulator said.

Pension Fund Regulatory and Development Authority (PFRDA)

Concept:

• Currently pension funds can only invest in companies with market cap more than ₹5,000 crore which also are in the F&O (futures and options) segment of bourses. The regulator will thus expand the investible universe to the top 200 companies.
• The regulator will fix certain criteria for eligible IPOs and similar primary issues
• Currently, NPS subscribers have to use 40% of their corpus to buy an annuity (a fixed pension) at maturity, at the age of 60.
• Asystematic withdrawal plan by comparison will give subscribers the choice of when and how much to withdraw from their pension corpus after maturity.

Superannuation funds

• The government is likely to make PFRDA the regulator for superannuation funds, which currently operate in a regulatory vacuum.
• Superannuation funds are retirement funds run by corporates. They are given approval by the income tax department, and they have to abide by the guidelines from the finance ministry; however, the government is in talks with PFRDA, the authority to regulate these funds.