Private Sector NPS Subscribers Can Now Invest In Alternative Investment Funds

New Delhi: The Pension Fund Regulatory and Development Authority (PFRDA) has created a separate asset class under which private sector National Pension System (NPS) subscribers can invest up to 5 per cent in alternative investment funds (AIFs) and real estate investment trusts (REITs).

The new class is in addition to the existing three categories - equity, corporate bond and government debt.

With creation of a separate class, private sector subscribers can now invest up to 5 per cent of funds in commercial mortgage-based securities or residential mortgaged-based securities and units issued by real estate investment trusts (REITs), and asset-backed securities regulated by Sebi.

They can also invest in units issued by infrastructure investment trusts and alternative investment funds (AIF).

Regulator PFRDA permits investment up to 100 per cent in both corporate bond and government debt. It has also introduced two new Life Cycle Funds for private sector subscribers to provide a pre-programmed diversification of assets in various asset classes as per the age and risk profile of the subscriber.

These are Aggressive Life Cycle Fund and Conservative Life Cycle Fund.

In the Aggressive Life Cycle Fund, the maximum investment in equity is restricted to 75 per cent whereas the same has been restricted to 25 per cent in the case of Conservative Life Cycle Fund.

In the existing Life Cycle Fund, the investment in equity is restricted to 50 per cent and would continue as a default scheme. It would be now known as Moderate Life Cycle Fund.