Starting 1st April 2019, fund managers of some NPS schemes and Atal Pension Yojana have more flexibility in investing in debt securities. Pension Fund Regulatory and Development Authority (PFRDA) has increased the limits on investments in debt securities for some NPS schemes and Atal Pension Yojana. The revised norms apply only to government NPS (central government as well as state government), corporate central government scheme (Corporate-CG scheme), NPS Lite schemes, and Atal Pension Yojana.
"In order to provide flexibility to the pension funds to improve the scheme performance depending upon the market conditions, it has been decided to increase the cap on government securities and related investments and short-term debt instruments and related investments by 5% each," PFRDA said in a circular dated March 25, 2019.
In government NPS, the contributions from subscribers are invested by the pension fund manager in different asset classes according to the limit set by the PFRDA.
Under government NPS (for both central and state government employees), the employee contributes towards pension from monthly salary along with matching contribution from the employer. The funds are then invested through pension fund managers in NPS schemes.
The Corporate-CG scheme is meant for corporate entities that want to invest in pension funds for their employees in the lines of government NPS scheme. Companies can invest in NPS either by choosing private sector NPS or government NPS. The private sector NPS offers more flexibility in terms of investment pattern.
The revised limits of various asset class, according to the PFRDA circular:
Atal Pension Yojana, a government of India scheme, is administered by PFRDA through NPS architecture. The scheme encourages workers, especially from the unorganized sectors, to save voluntarily for their retirement.