Pick a pension that suits you: PFRDA plans big overhaul

Mumbai: India’s pension regulator is planning a big change that could give retirees and investors more choice in how their money is managed.

The Pension Fund Regulatory and Development Authority (PFRDA) is considering allowing pension fund houses to design their own tailor-made plans, people familiar with the talks said.

Currently, pension savings are invested in fixed patterns decided by the regulator, leaving little room for customization.

If the proposal goes through, fund managers like SBI Pension Fund and ICICI Prudential Pension Fund will be able to launch new products that suit different needs and risk levels. For example, there could be special pension plans designed for women or other specific groups.

This shift would give customers more flexibility, potentially higher returns, and plans better suited to their individual goals. Pension funds would also be allowed to charge slightly higher fees to cover marketing and product development.

Right now, the National Pension System lets investors choose from four asset classes: equities, corporate debt, government bonds, and alternative funds. But the choices are limited to a few regulator-approved plans.

The Indian pension industry, worth around $175 billion, has been growing quickly and attracting more foreign investment, especially after the foreign ownership cap was raised to 74% from 49% in 2021.