The Pension Fund Regulatory and Development Authority (PFRDA) has allocated Rs 5,100 crore to pension fund managers this year, 38% more than last year’s Rs 3,700 crore.
“This is because of the high number of subscribers, which is at 9.9 lakh currently,” Rani Nair, executive director of PFRDA said.
The corpus mainly comprises contribution of central and state government employees. “Around Rs 5,000 crore is from the government and the rest comes from unorganised sector,” said Nair.
The corpus under the New Pension System (NPS), introduced in 2004, is allocated to three fund managers —- SBI Pension Funds, LIC Pension Fund and UTI Retirement Solutions —- which started investment operations in April 2008.
The highest allocation this year has gone to LIC Pension Fund (35%), followed by SBI Pension Funds (33%) and UTI Retirement Solutions (32%).
“We follow a method of allocating on the basis of pervious year’s performance. Marginally, they (LIC Pension) were better than the others,” said Yogesh Agarwal, chairman, PFRDA.
LIC Pension Fund was allotted 29% last year and 5% a year before that.
“We have more than 10% of our investments in the equity markets, which gave good returns as the markets revived last year. Other than that, our investments in government securities..,” said Hari Sadhak, chief executive officer, LIC Pension Fund.
While investing, fund managers need to adhere to PFRDA guidelines, which state that not more than 55% is to be invested in government securities, 40% in corporate bonds, 15% in equity and 5% in money markets. “Depending upon the market situation, we keep changing our portfolio,” said Sadhak.
As on July 17, 2010, SBI Pension Funds had a net asset value (NAV) of Rs 13.2430 for central government employees. LIC Pension Fund posted NAV of Rs 12.8277 for central government and Rs 11.1602 for state government employees.