NPS investment rules changed: Will these National Pension Scheme changes by PFRDA impact you? Details here

National Pension Scheme (NPS): The Pension Fund Regulatory and Development Authority (PFRDA) has made some changes to the investment guidelines in some of the NPS schemes. The regulatory body has now increased the limits on investments in debt securities. In an official circular dated March 25, 2019, PFRDA, said: "In order to provide flexibility to the Pension funds to improve the scheme performance depending upon the market conditions, it has been decided to increase the cap on Government Securities and related investments and short-term debt instruments and related investments by 5% each."

What is debt security/instrument?

A debt instrument/security is basically a borrowed money that must be repaid and has a fixed amount, a maturity date (or dates), and generally a specific rate of interest. Examples of debt securities in India include government bonds, national savings certificate (NSC), Government securities, Fixed Deposit etc. 

How will you be affected?

The changed investment guidelines will now allow up to 55% investment in Government securities and up to 10% in short-term debt instruments and related investments.  There is no change to the investment limits in debt instruments and related investments (up to 45%), equity and related investments (up to 15%), and asset-backed, trust, structured etc (up to 5%).

The changes introduced by PFRDA are expected to bring stability and improve the performance of the scheme, thus benefitting subscribers in the long run.

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When the changes will come into effect?

As per the PFRDA circular, the changes will come into effect from April 1, 2019 and apply only to the NPS - Central Government Scheme (CG), State Government Scheme (SG), Corporate Central Government (CG) scheme, Life schemes of NPS and the Atal Pension Yojana. 

*PFRDA circular

NPS: Total subscribers

Till February 2019, there were 51,76,806 NPS subscribers, including  40,20,327 males and  11,40,188 females. New subscribers added to the NPS from among the central government employees in February numbered 7616, while 49,673 state government employees also joined in the same month. As many as 9230 new NPS subscribers came from the corporate sector, according to the data released by PFRDA.