The returns on the pension scheme National Pension System (NPS) are currently linked to the returns of the underlying instruments such as equity, debt or a mix of both. But the PFRDA, the institution managing the fund may soon allow its subscribers to choose a fund that offers minimum guaranteed return.

For it, the fund has invited an EOI from Actuarial firms to come up with a Minimum Assured Return Scheme (MARS) that can be implemented under the NPS structure.

And if the MARS scheme comes into play under the NPS then subscribers will be assured of a minimum return over a specified period. And any lag in the return will be compensated by the sponsor of the scheme. It is to be noted that the pension scheme is not completely a DB scheme.

Also, there can be a guarantee reset period that can be set quarterly/half-yearly/annually or any such period that is decided keeping account of subscriber interest as well as pension funds who come offering such products.

The PFRDA Act 2013 clearly states that there shall not be any implicit or explicit assurance of benefits except market-based guarantee mechanism to be purchased by the subscriber.

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