
There are four market schemes within the NP. In the default system only the administrators of government pension funds – pension funds SBI PVT. LTD, UTI RETIREMENT SOLUTIONS LTD and LIC PENSION FUND LTD – can manage employees’ contributions. Each fund manager must invest 85% of the fixed -income assets and 15% in shares.
“Increasing the allocation of equity from 15% to 25% will bring long-term benefits to members of these funds. Long-term exaggerations of stock markets are well established, especially in connection with the allocation of the pension fund. Since the allocation is debt-Heavy, it is limited,” said Poornima Rao, director, Patternaealth Forth.
As a result, government pension fund administrators now deploy more funds for stocks. Asset under administration (AUM) by the default scheme cost £3.7 trillion from 28 February 2025, which means almost £37,000 crore is expected to flow into the shares. WITH £7 trillion in state government programs may expected shares to go up £1 trillion.
Because most central government employees prefer the default system, LIC, SBI and UTI will be better for the growth of their businesses and attract more subscribers.
Other fund managers such as HDFC pension management, Prudential Pension Fund, ICICI, Pension Fund Kotak Mahindra, Aditya Birla Sunlife Pension Management, Axis Pension Fund Management and DSP Pension Funds can only offer three other Lifecycle schemes (LC): LC-25, LC-50 and scheme G.
The allocation of equity is limited to 25% in LC-25 and 50% in LC-50. In the G Scheme, 100% of the contribution is invested in government securities.
Sure, Lic, SBI and UTI can also run other schemes.
Private funds want
People said some private fund managers were a reason to offer fund administration services to government employees.
They added that the change would also apply to a unified pension system (UPS), a new pension system that provides secured payouts. In addition, the increase in the allocation of its own capital will most likely be extended to state government employees.
This means that the opportunity is huge for government pension fund managers that private players want to share.
“Allow private players to manage the central government’s pension systems will lead to better performance, innovation and responsibility of financing, and ultimately a beneficial pensioner,” said Kunal Arara, founder of SKVC Consulting, consulting firm specializing in working laws.
Rao agrees. “Although one has to take into account short -term commercial considerations, it feels that the expanding pension market will be important for members,” she said.
Over the past five years, the Tier-1 UTI, LIC and SBI stock funds have brought revenues of 25.5%, 25%and 22%. Kotak and ICICI brought every 25% yields. HDFC and Aditya Birla offered 24% and 23.68% of yields.
In particular, the ownership component may increase up to 75% in pension programs for private employees, as they can choose their allocation between their own capital, government securities and business bonds. It is 15% for the interim fund of employees (EPF).
Increasing the component of equity would occur as Deepak Mohanta, the chairman of the regulatory and development office of the pension fund, which is preparing for retirement in May.
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