2023-06-07 17:10:10
Pension Fund Regulatory and Development Authority (PFRDA) chairman Deepak Mohanty said on Wednesday that the regulator is working on a pension scheme that might provide a minimum assured return.
“We are considering that product. We have made some progress. We will come out with that product, and at the same time, one would have to see that the return should be attractive,” said Mohanty.
Earlier this week, Mohanty told ET that pension funds are thinly capitalised and will need to bring in solvency capital if they offer guaranteed returns.
The pension regulator noted on Wednesday that the minimum assured returns pension scheme is going to have a higher premium than others so that it can ensure attractive returns. Mohanty noted that in the case of an assured return, the pension fund has to provide more capital because it is taking on more risk.
“There we have to balance risk and return …somebody gives assurance, and it will come with a cost. Like in APY, the government gives assurance, and they bear the cost,” Mohanty said.
He added that there are regarding 5.3 crore subscribers to the Atal Pension Yojana (APY) and the centre is targeting to enrol 1.34 crore new subscribers this year.Mohanty, however, refused to comment on the panel constituted to review the pension system for government employees, headed by finance secretary TV Somanathan. The committee was set up once morest the backdrop of many states reverting back to the Old Pension Scheme (OPS) and demanding the return of the NPS corpus.
“There is no provision in statute to return the pension amount as it belongs to contributors,” he added.
The central government said in March that there is no provision in the PFRDA Act for a refund of the accumulated NPS corpus being sought by the five non-BJP states that want to restart the Old Pension Scheme.
The state governments of Rajasthan, Chhattisgarh, Jharkhand, Punjab, and Himachal Pradesh have informed the Centre regarding their decision to revert to the OPS and have requested a refund of corpus accumulated under the Nationale Pension System (NPS).
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