The previous provision allowed subscribers in the scheme to deploy upto 50% of the funds into equities via index or exchange-traded funds. However, as the weighted average returns from the scheme by investment in equity was reportedly lower in comparison to other investment options, regulator in the month of May last year relaxed the provision providing room for direct investment in equity.
As per the revised guidelines, the PFRDA has also asked fund managers to decide on the index which the fund wishes to track i.e. either Nifty or Sensex in advance on an annual basis by the fund manager. Government-sector NPS schemes provide investors with 4 options to choose from including G-securities, debt securities, money market instruments and equity whereas schemes for the unorganized or private sector offer 3 options that include equity or E (high risk, high returns investment instrument), corporate bonds or C (medium risk with medium gains) and government-debt or G ( low risk and low return). Also a set of restrictions have been levied for both organized and unorganized sector NPS schemes to lower concentration risks for subscribers in the scheme.
Among other proposed changes such as the decision to appoint new fund managers for pension scheme, relaxation in the withdrawal of funds held in the scheme, the new change is brought about under the leadership of Anup Wadhawan.