Pension fund regulator PFRDA is going to bring a pension scheme with guaranteed returns to subscribers in FY 2022. It will be brought under the National Pension System (NPS). The regulator may finalize the product by March. PFRDA chairman Supratim Bandopadhyay has given this information. He said that there was a discussion last year about the product with minimum guaranteed returns. NPS is a market related product and it has given about 10 per cent return in the last 10 years.
Currently, schemes under NPS do not guarantee returns or profits, as they are market-determined. The average annual return for central government and state government employees in the last 11-12 years has been around 10 per cent. Returns have also been around 9–10 per cent during the last one year.
Bandopadhyay said that it is our effort that a large number of people come under the ambit of pension, which is not there now. This is especially important for small businessmen and the unorganized sector. We are seeing if we can bring them under the ambit of NPS or Atal Pension Yojana (APY).
He said that the regulator will soon set up a committee. We will prepare the product in this financial year and put it before the board of directors. You can get to see such a product in the next 6 months. He said that all the guaranteed products in the insurance sector were gradually withdrawn, as it was felt that it is not practical for organizations to maintain them for long periods.
Bandopadhyay said that offering guaranteed products is part of our law. As soon as you offer a guaranteed product, the capital adequacy requirement for fund managers increases. At the moment what we are doing, the product is on ‘mark to market’ basis. We are not taking any risk regarding investment.