PFRDA has allowed pension fund managers to maintain their mutual funds holdings in physical form also.
Earlier this year, PFRDA had advised pension fund managers (PFMs) to hold MF units in de-mat form only. However, with this development, pension fund managers can decide their mode of MF holding.
Only, the Stock Holding Corporation of India (SCHIL) is the custodian for NPS for demat form.
Meanwhile, the pension fund regulator has clarified that pension fund managers can invest in money market securities through liquid funds. There was a confusion among pension fund managers if they can invest in liquid funds to take exposure to money market instruments.
With this, pension fund managers can invest only up to 5% of NPS corpus in liquid funds. Roughly, the mutual fund industry can receive inflows of Rs.7,500 crore from pension fund managers in liquid funds.
PFRDA said, “Pension funds may hold the instruments in liquid mutual fund schemes in physical form subject to the overall ceiling on money market instruments as stipulated in investment guideline.”
The revised investment guidelines for NPS would be applicable to existing as well as incremental investments in NPS.
Earlier in September 2015, PFRDA had allowed pension fund managers to invest NPS corpus in mutual funds. The pension fund regulator had allowed PFMs to invest in mutual funds having at least 65% exposure to large cap stocks. The pension fund regulator had also allowed pension fund managers to take equity exposure through low cost index ETFs and CPSE ETFs. In addition, Pension fund managers are allowed to invest in income funds, gilt funds and liquid funds to take exposure to debt instruments.
Recently, PFRDA has allowed Pension fund managers to invest up to 5% of NPS corpus in Real Estate Investment Trust (REITs) and Infrastructure Investment Trusts (InvITs).
