Pension Fund Regulatory and Development Authority (PFRDA) has approved an increase in investment cap in equities from 50% to 75% for private sector NPS subscriber in 'Active choice'. By opting for either of the two available investment options i.e Auto and Active Choice, investors in NPS scheme are allowed to design their own portfolio.
In the statement PFRDA said, "Presently there is a cap of 50% on equity investment under active choice in NPS. The proposal on increasing the cap on equity investment in the active choice to 75% from current 50% has been approved by the Board". The move is likely to provide impetus to the capital markets.
Nonetheless, the decision comes with a clause of tapering the investment in equity after the attainment of 50 years of age by the NPS subscriber.
The pension authority also said, "Partial withdrawals will now be allowed to NPS subscribers who wish to improve their employability or acquire new skills by pursuing higher education/ acquiring professional and technical qualifications". Also, the proposal to change the investment grade rating from 'AA' to 'A' for corporate bonds was approved by the board.
NPS or National Pension Scheme was introduced in January 2004 and initially included new entrants in central government and state government services as well as central autonomous bodies but later included all Indian citizens in May 2009.