Preparation for guaranteed return in NPS, PFRDA formed expert committee: Draft of minimum assured return scheme will be prepared; Subscribers who do not take risks benefit

The Pension Fund Regulatory and Development Authority (PFRDA) is preparing to launch a new scheme under the National Pension System (NPS). In this, subscribers will be assured of a fixed minimum return (guaranteed return).

For this, the regulator has constituted an internal expert committee, which will prepare the framework of ‘Minimum Assured Return Scheme’ (MARS). After the committee’s report comes, it will be released for public consultation.

After the committee report, suggestions will be sought from the public

PFRDA Chairman Deepak Mohanty said that a committee has been formed to decide the outline of the Minimum Assured Return Scheme. As soon as the committee submits its report, it will be opened for suggestions and comments from the general public.

According to Mohanty, the aim is to create a framework that is sustainable for pension funds and can guarantee returns to subscribers.

This scheme will be different from market linked returns

Currently NPS is completely a market-linked product. This means that the returns you get depend on how equities, corporate bonds and government securities have performed in the market.

Although NPS has given good returns in the long run, there are many investors who do not want to take risk and expect a fixed return. MARS is being created keeping these investors in mind.

Returns may be slightly less in exchange for guarantee

Under the proposed scheme, pension fund managers will have to offer a guaranteed return. However, this guarantee will not be free. Experts believe that for this, subscribers may have to pay a slightly higher management charge or the returns may be slightly lower than a normal market-linked plan. This is because pension funds will have to reserve separate capital to meet the guarantee.

Help of consultants was taken to remove confusion

PFRDA has been working on this scheme for a long time. Earlier, the regulator had taken the help of external consultants to examine the feasibility of this scheme. Now the new committee will use those old findings and data to prepare a formal regulatory framework.

Effort to increase the scope of NPS

This step is expected to increase the scope of NPS. There is a large section of the country who, fearing the ups and downs of the stock market, looks for safe options for retirement savings.

Such people will be attracted towards NPS due to guaranteed returns. Apart from this, PFRDA is also working on simplifying the onboarding process and improving the features of Systematic Withdrawal Plan (SWP).

Read this news also…

Silver rose by ₹20,000 to ₹2.63 lakh/kg in two days: Gold was being sold at ₹1.40 lakh per 10 grams; Both at all-time high for the second consecutive day

Gold and silver prices reached all-time high for the second consecutive day (January 13). According to India Bullion and Jewelers Association (IBJA), the price of one kg silver has increased by Rs 6,256 to Rs 2,63,032. Yesterday it had made an all time high of Rs 2,57,283. Silver has become costlier by more than Rs 20 thousand in two days.

At the same time, the price of 10 grams of 24 carat gold increased by Rs 33 and opened at an all-time high of Rs 1,40,482. However, after this its price declined and it fell by Rs 165 and closed at Rs 1,40,284. Yesterday it was Rs 1,40,449 per 10 grams. Read the full news…