Pension regulator prefers equity to debt

Pension Fund Regulatory and Development Authority (PRFDA) chairman D Swarup is in favour of investing up to 70 per cent corpus of the pension fund in the Indian equity market although the new pension bill, yet to be passed by the Indian parliament, allows the equity investment only up to 50 per cent of the pension fund corpus.

Talking to reporters after the convocation ceremony organised by Financial Planning Standards Board of India in Mumbai on Friday, Swarup said, “In the past 50 years, the average long term yields from Indian equities have been not less than 14 per cent. As experts worldwide foresee similar appreciation scenario to continue on Indian bourses, pension fund’s substantial investment into the Indian equities for a long span is not at all a risky proposition. We should follow the US pension fund investment pattern to gain maximum equity appreciation at the lowest possible risk.”

“Most leading private fund managers of the country have approached us to manage the pension fund corpus. Provided the government allows, we are keen to appoint them to compete with personnel from SBI, UTI and LIC to manage our equity investments,” he said.

Swarup urged the government to pass the new pension scheme bill in the forthcoming budget session. “Since by the year 2020 the population of senior citizens in India is expected to cross 160 million mark, the time is ripe now that we initiate a reformed social security scheme in the country at the earliest. As for existing coverage of old age reform, only about 12 per cent of the total workforce is presently covered by any social security system in India. Also, the cumulative annual pension budget, worth Rs 65,000 crore of central and the state governments, is presently growing at an alarming rate of over 20 per cent per annum,” he said.