The Pension Fund Regulatory and Development Authority (PFRDA) has constituted a high-level Strategic Asset Allocation and Risk Governance (SAARG) committee under the chairmanship of Narayan Ramachandran.
- The Pension Fund Regulatory and Development Authority (PFRDA) has constituted a high-level Strategic Asset Allocation and Risk Governance (SAARG) committee under the chairmanship of Narayan Ramachandran, former Country Head and Chief Executive Officer (CEO) of Morgan Stanley India, to review, recommend, and modernize the investment framework under the National Pension System (NPS).
- The committee will undertake a comprehensive review of the existing NPS investment guidelines and compare them with leading global pension systems and the evolving Indian investment ecosystem.
- The committee will compare the NPS investment framework with major pension systems of the world and the changing Indian investment ecosystem and will submit its recommendations to PFRDA within nine months.
- The objective of SAARG is to modernize the NPS framework, improve risk governance, expand subscriber choice, and support long-term retirement wealth creation.
Overview of the SAARG committee:
- Structure: The 10-member committee includes distinguished experts from capital markets, asset management, and securities law, including one Executive Director (ED) of PFRDA as a member.
Members of the committee:
- 1. Anant Narayan, former Whole-Time Member, Securities and Exchange Board of India (SEBI)
- 2. Devina Mehra, Founder and Chairperson and Managing Director (CMD), First Global (PMS and Global Funds) – Portfolio Management Services (PMS)
- 3. Kalpen Parekh, Managing Director (MD) and Chief Executive Officer (CEO), DSP Mutual Fund
- 4. Prashant Jain, Chief Investment Officer (CIO), 3P Investment Managers;
- 5. Rajeev Thakkar, CIO, PPFAS Asset Management Private Limited (PPFAS AMC)
- 7. Ramdev Agrawal, Co-founder, Motilal Oswal; Chairman and Co-founder, Motilal Oswal Financial Services Limited (MOFSL)
- 7. Shankaran Naren, CIO, ICICI Prudential Asset Management Company Limited (ICICI Prudential AMC)
- 8. Sumit Agrawal, Founder, Regstreet Law Advisors
- 9. Ashok Kumar Soni, Executive Director (ED), PFRDA.
About the Pension Fund Regulatory and Development Authority (PFRDA):
- PFRDA was initially established by the Government of India (GoI) on 23 August, 2003 as an interim body to promote, regulate, and develop the pension sector, and was later established as a statutory authority under the PFRDA Act, 2013 on 1 February, 2014.
- Chairman – Shivsugbramanium Raman
- Headquarters – New Delhi (Delhi)
M.S. Sahoo committee
- The Pension Fund Regulatory and Development Authority (PFRDA) has constituted a high-level committee to prepare a regulatory framework for assured payouts under the National Pension System (NPS), with the objective of ensuring certainty of post-retirement income.
- It is a 15-member panel, led by M. S. Sahoo, former Chairman of the Insolvency and Bankruptcy Board of India (IBBI). It has been constituted as a Standing Advisory Committee on structured pension payouts and may invite external experts for consultation.
- Objective: The main objective is to prepare guidelines for legally enforceable, market-based guarantees under NPS.
- This includes defining key parameters such as lock-in period and pricing, establishing risk management norms along with capital requirements, and examining the tax implications on payouts under the system.
National Pension System (NPS)
- Introduction: The National Pension System (NPS), implemented on 1 January, 2004, is a market-based, contribution-based pension scheme designed to provide individuals with a regular income at the time of retirement. This scheme replaces the earlier pension system (OPS).
- The National Pension System (NPS) is managed by PFRDA under the PFRDA Act, 2013. The scheme is jointly funded by the employee and the government. Employees contribute 10% of their basic salary and dearness allowance (DA), which is matched by an equal contribution of 14% by the government.
- Need for NPS: The earlier OPS was an unfunded system, with no dedicated corpus. As a result, government pension liabilities increased from ₹3,272 crore in the year 1990-91 to more than ₹1.9 lakh crore in the year 2020-21, creating an unstable and unsustainable financial burden on the exchequer.
- Transition towards UPS: In view of the opposition arising due to lower assured returns compared to OPS and the mandatory contribution by employees, the government constituted the Somnathan Committee in the year 2023.
- Based on the recommendations of the committee, the new Unified Pension Scheme (UPS) has been introduced, which aims to focus on greater certainty of post-retirement income.
