PFRDA has allowed pension fund managers to invest NPS corpus in AIFs. The pension fund managers can now deploy up to 5% of NPS corpus in AIFs.
NPS is a voluntary pension scheme launched by PFRDA which aims to provide pension to people in both the organized and unorganized sectors. So far, there were three asset classes under NPS – gilt, fixed income and equity.
The pension fund regulator has said that the NPS corpus can be invested in AIF category I and category II. While, category I AIFs invest in SME funds, venture capital funds, infrastructure funds and social venture funds, category II AIFs invest in private equity or debt fund. In addition, the pension fund managers can also deploy NPS corpus in REITS and InviTs.
Vikas V Gupta, Executive Vice President and Chief Investment Officer of Arthveda Fund Management said that the move will help retail investors to taste AIFs. Since the minimum ticket size under AIFs is Rs. 1 crore, most investors investing in AIFs belong to HNI category. He further said, “Globally, pension funds invest primarily in AIFs because of its long term nature. I believe that the move will take time to mark significant impact in the Indian AIF industry.”
The new guidelines have come with immediate effect.
The pension fund managers manage an AUM of over Rs.1.50 lakh crore under NPS as on October 31, 2016.
