The Pension Fund Regulatory and Development Authority (PFRDA) has constituted an expert committee to review and update the investment framework of the National Pension System (NPS). The move is aimed at improving long-term retirement outcomes for subscribers by strengthening asset allocation, governance standards and risk management practices.
The nine-member committee, called the Strategic Asset Allocation and Risk Governance (SAARG) Committee, will be chaired by Narayan Ramachandran, former India head and CEO of Morgan Stanley. It includes senior professionals from asset management firms, financial markets and investment research.
PFRDA said the committee will conduct a comprehensive review of existing NPS investment guidelines and recommend changes in line with current market conditions and global best practices. The focus will be on enhancing diversification, ensuring portfolio stability and improving returns while keeping risks under control.
A key area of review will be the strategic asset allocation framework followed by NPS pension funds. The committee will examine how different asset classes are structured and whether new asset categories should be introduced or existing limits revised. It will also review performance measurement systems and accountability mechanisms for fund managers.
The panel will study valuation norms and liquidity aspects of alternative investments such as real estate, infrastructure investment trusts (InvITs), real estate investment trusts (REITs) and private equity. Strengthening governance standards and risk oversight mechanisms will also be a priority.
In addition, the committee will assess portfolio liquidity management, operational processes and the role of intermediaries within the NPS ecosystem. It will also explore ways to integrate environmental, social and governance (ESG) considerations into investment decisions, reflecting the growing importance of sustainable investing.
The SAARG committee has been given a timeline of nine months to submit its recommendations to PFRDA. Based on the findings, the regulator may revise NPS investment rules to provide greater flexibility, improved transparency and stronger risk controls.
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