This scheme will have two variants—moderate and high-risk. The high-risk scheme will allow 100% equity investment. Currently, the equity investment limit is 75%. Pension funds can also offer low-risk plans if they wish.
If you’re planning to invest in the National Pension System (NPS), there’s good news for you. On October 1st, pension fund management companies will launch a plan for subscribers that allows 100% equity investment. All investors, except government employees, will be eligible to invest in this plan. The Pension Fund Regulatory and Development Authority (PFRDA) has announced this new scheme, called the Multiple Scheme Framework (MSF).
Customised schemes will be available for subscribers
This scheme will offer NPS subscribers customized retirement solutions. The PFRDA has issued a circular in this regard. It states, “MSF has been designed under a new architecture, in which subscribers will be identified by their Permanent Account Number (PAN) at all Central Record-Keeping Agencies (CRAs).” Under the new framework, pension fund managers will be able to design schemes that are tailored to the needs of the subscribers.
The scheme will have two variants – low risk and high risk.
This scheme will have two variants—moderate and high-risk. The high-risk scheme will allow 100% equity investment. Currently, the equity investment limit is 75%. Pension funds will also be able to offer low-risk plans if they wish. The PFRDA circular states, “Risk profiling of subscribers will be based on social and economic criteria.” All schemes will come with a risk-o-meter. This will help subscribers understand the risks associated with each scheme.
The minimum vesting period will be 15 years
These schemes will be required to use the term “NPS.” The objective of each scheme will also be stated. The minimum vesting period for investments in this scheme will be 15 years. Subscribers will receive the full amount upon reaching 60 years of age or upon retirement. The PFRDA has stated that the total charge will be capped at 30% of the annual AUM.
MSF launched on the occasion of NPS Day
Experts say that the MSF will provide subscribers with more choice and control over their retirement savings. This will open up opportunities for innovation for pension funds and increase competition among them. The MSF will be launched on October 1, which also happens to be NPS Day.
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