New Delhi, Jan 25 The Pension Fund Regulatory and Development Authority (PFRDA) has constituted a committee of investment experts for Strategic Asset Allocation and Risk Governance (SAARG) to review, recommend and modernise the investment framework under the National Pension Scheme (NPS), it was announced on Sunday.
According to Finance Ministry, the panel has been tasked with undertaking a comprehensive review of the existing NPS investment guidelines, benchmarking them with leading global pension systems and the evolving Indian investment ecosystem.
“The objective is to strengthen the investment architecture of NPS to support long-term retirement wealth creation, enhance diversification, improve risk management practices and expand subscriber choice,” according to a ministry statement.
SAARG will be chaired by Narayan Ramachandran, former Country Head and CEO of Morgan Stanley India. It will also have eminent experts from the fields of capital markets, asset management and securities law. The committee will have nine months to examine and submit its report to PFRDA with its recommendations.
According to the ministry, the scope includes examination of strategic asset allocation frameworks, introduction and review of asset classes, performance measurement and accountability mechanisms, ALM practices, valuation standards for alternative investments, portfolio stability and liquidity optimisation measures, governance and intermediary architecture, and integration of sustainability considerations in investment decision-making.
The constitution of SAARG reflects PFRDA’s continued commitment to strengthening the NPS investment framework in a forward-looking manner and ensuring that it remains resilient, diversified and aligned with the evolving needs of subscribers in their long-term wealth creation journey.
It will review existing NPS investment guidelines for Government and Non-Government Sectors for adequacy, effectiveness and long-term relevance, and benchmark NPS investment architecture with leading global pension systems and Indian peer investment ecosystem and recommend reforms.
It will also review all permitted asset classes and suggest enhancements to improve diversification and long-term retirement wealth creation and introduction of new asset classes to mitigate geopolitical, macroeconomic and market-cycle risks.
It will recommend optimal strategic asset allocation across equity, debt, money market and alternate assets balancing safety, liquidity and returns and define eligible investment universe under each asset class and recommend prudential exposure and concentration limits.
The panel will also review and enhance existing subscriber investment choices including lifecycle and target-date structures and recommend optimal mix of active and passive investment strategies.
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