PFRDA New Rule: Many times people in NPS are worried about which asset to invest in. PFRDA has now framed new rules keeping these investors in mind, which will make it easier for NPS subscribers to decide which assets they should invest in.
PFRDA New Rule: If you have also invested in NPS then there is good news for you. Now you will also be able to get information about the risks involved in the schemes of National Pension System (NPS). PFRDA has made a new rule for this. Now as per the new rules, pension funds will now have to submit risk information of all NPS schemes on their websites within 15 days before the end of each quarter.
Actually, people in NPS are often worried about which asset to invest in. This move by PFRDA is aimed at helping NPS subscribers decide which assets would be beneficial for them to invest.
PFRDA issued guidelines
Pension fund regulator Pension Fund Regulatory and Development Authority (PFRDA) has issued a guideline for this. Accordingly, the regulator has chosen six risk levels to make investors aware. Before investing in various NPS schemes, they will give all the information about the risks associated with them. Let us tell you that the new rules will be applicable from July 15, 2022. Also, these will be applicable to all existing schemes of categories E, C, G and A.
What is the new rule?
According to the circular issued by the FRDA, “Investment under different asset classes of pension fund schemes will involve varying levels of risk for the subscribers.” Therefore, it is necessary that the information about the risks involved in various schemes of NPS is made available to the customers. Six levels of risk have been prescribed. First is low risk, second is low to medium risk, third is medium risk, fourth is medium-high risk, fifth is high risk and sixth is very high risk.
Not only this, the regulator has also said in the circular that the Tier-I and Tier-II asset classes are equity (E), corporate debt (C), government securities (G), and pension funds managing Scheme A. Maintain and communicate the risk profile of
Keep these things in mind before investing
- Accordingly, the risk levels of Pension Fund E-Tier 1, E-Tier 2, C-Tier 1, C-Tier-2, G-Tier-1, G-Tier-2 and Scheme A depending on the characteristics of the scheme will be decided.
- It will be mandatory to provide the risk level information in the ‘Portfolio Disclosure’ section of the Pension Fund’s website within 15 days before the end of each quarter.
- The risk level determined by the pension fund will be checked on a quarterly basis. If there is any change, it will be informed on the websites of the Pension Fund as well as the websites of the NPS Trust.
- Pension funds will publish about the schemes on their website by 31st March every year.
- It will be mandatory to report every time the risk level is changed during a year.
