NPS in Equity – PFRDA changes the investment portion in Equity to 15%
NPS in Equity – Revision of Guidelines for NPS Schemes – PFRDA changes the investment portion in Equity for NPS Applicable to government Employees to 15%
In addition to investment in Equity, Money market investment fixed at 5%
PFRDA/2014/02/PFM/1
Sub: Revision of Investment Guidelines for NPS Schemes
S.no | Category | Investment Guidelines |
(i) | Government Securities (upto 55%) | (a) Government securities.(b) Other securities, the principal whereof and interest whereon is fully and unconditionallyguaranteed by the Central Government or any State Government except those covered under (ii) (a) below.
(c) units of mutual funds set up as dedicated funds for investment in Government securities and regulated by the Securities & Exchange Board of India. Provided that the exposure to a mutual fund shall not be more than 5% of the total portfolio of G Secs in the concerned NPS Scheme at any point of time. |
(ii) | Debt securities (upto 40%) | (a) Debt securities having a minimum residual maturity period of three years from the date of investment by the Pension Fund issued by Bodies Corporate including banks and public financial institutions; Provided that the investment in this category is made in instruments having an investment grade rating from at least one credit rating agency. Apart from rating by an agency,PFMs shall undertake their own due diligence for assessment of risks associated with the securities before investments.
(b) Term deposit Receipts of not less than one year duration issued by scheduled commercial banks. Provided that the scheduled commercial banks must meet conditions of (i) continuous profitability for immediately preceding three years; (ii) maintaining a minimum Capital to Risk Weighted Assets Ratio of 9%; (iii) having net non‐performing assets of not more than 2% of the net advances; (iv) having a minimum net worth of not less than Rs. 200 crores. (c) Rupee Bonds having an outstanding maturity of at least 3 years issued by institutions of the International Bank for Reconstruction and Development, International Finance Corporation and the Asian Development Bank, Rated IDFs (Infrastructure Debt funds), Rated ABS (Asset Backed Securities) with the conditions applicable to debt securities in (ii) (a) above. (d) Debt Mutual Funds as regulated by SEBI. |
iii) | Money Market Instrument(upto5%) | Money market instruments including units of money market mutual funds |
iv) | Equity (upto 15%) | Shares of companies on which derivatives are available in Bombay Stock Exchange or National Stock Exchange or equity linked schemes of mutual funds or Exchange Traded Funds regulated by the Securities and Exchange Board of India. |
3. Investment Guidelines for Private Sector NPS {applicable to E (Tier- I & II), C (Tier I & II), and G (Tier – I & II)}
AssetClass | Investment Guidelines |
E |
Index funds/ Exchange Traded Funds that replicate the portfolio of either BSE Sensex index or NSE Nifty 50 index. Index Fund Schemes invest in securities in the same weightage comprising of an index. The PF will have to choose which index they intend to track in advance on an yearly basis.
|
C |
(i) Fixed Deposits of scheduled commercial banks with the following filters : (a) Net worth of at least Rs. 500 crores and a track record of profitability in the last three years (b) Capital adequacy ratio of not less than 9% in the last three years. Net NPA of under 5% as a percentage of net advances in the last year (c) List to be reviewed half yearly (ii) Credit rated debt securities with residual maturity of not less than three years from the date of investment, issued by Bodies Corporate including scheduled commercial banks and public financial institutions [as defined in Section 4A of the Companies Act] 1956, provided that the instrument has an investment grade rating from at least one rating agency. PFM has to do his own due diligence too (iii) Credit Rated Public Financial Institutions/PSU Bonds (iv) Rated asset backed securities /Credit Rated Municipal Bonds/Infrastructure Bonds/Rated Infrastructure Debt Funds with the conditions given in (ii) (a). (v) Debt Mutual Funds as regulated by SEBI. |
G |
(i) Government of India Bonds (ii) State Government Bonds |
E/C/G |
Pending deployment as per investment objective, the moneys under the respective Schemes may be invested in short-term deposits of Scheduled Commercial Banks as eligible under para (i) (a),(b) and (c) above or in call deposits or in short-term money market instruments or other liquid instruments or Liquid Funds of AMCs regulated by SEBI with the following filters: • AMCs are SEBI regulated, with Average total assets under management (AUM) for the most recent six-month period of, at least, Rs.5000 crore. All assets that are permitted for investment into liquid funds by SEBI or both not exceeding a limit of 10% of scheme corpus on temporary basis only. |
Mamta Rohit
Chief General Manager
Download PFRDA Circular PFRDA/2014/02/PFM/1 dated 29.01.2014