As per the Pension Fund regulatory body's (PFRDA) Chairrman Supratim Bandyopadhyay, the pension authority is working on a minimum assured return pension plan. For the same the PFRDA is consulting pension funds as well as actuarial firms for working out the contours of the planned scheme.
"Under the PFRDA Act, we have the mandate to launch a minimum assured return scheme. Under pension fund (PF) schemes, the funds that are managed are mark-to-market. So obviously there is some volatility and the valuation is according to the market movement. "So under that, there may be some people who would like to have some minimum assurance (on return). So for that, we are working with our pension fund managers and some actuarial firms to find out what could be the ideal (minimum) level of guarantee that can be given," Bandyopadhyay told PTI.
He further added that still the assurance on return will need to be pegged with the market as eventually the onus of providing guaranteed portion on the return on investment is on the pension fund manager. And on the timing of the launch of the new pension product, Bandyopadhyay said "We will try. This is a product that we will be giving out of our own." As other popular pension avenues such as APY and NPS have been worked out in collaboration with the finance ministry.
"So this will be the first product to be launched by the PFRDA. Here the actuarial aspect plays a very-very crucial role because in our existing products we are not guaranteeing anything. Whatever the market returns are, net of costs, we are passing it on to the customers wherein basically the investment risk is with the customer," Bandyopadhyay said.
With PTI Inputs