FDI limit in NPS fund managers hiked to 74%

The government notified a hike in the foreign direct investment limit in pension fund management to 74% from 49% under the national pension system (NPS). This step is opening doors for experienced foreign partners in this space and facilitating more competition in the fledgling segment. Pension Fund Regulatory &Development Authority (PFRDA) Act links the FDI ceiling in the insurance sector.

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National Pension System (NPS) was launched in January 2004 for government employees and later in 2009, it was opened to all. There are two types of accounts in NPS – Tier 1 and Tier 2. If a person invests in Tier 1 account then he/she gets an additional tax exemption of up to Rs 50,000. National Pension Scheme is being regulated by PFRDA.

7 Pension Funds in NPS:

• HDFC Pension Management
• ICICI Pru Pension Funds Management
• Kotak Mahindra Pension Fund Management
• LIC Pension Fund
• SBI Pension Funds
• UTI Retirement Solutions
• Aditya Birla Sun Life Pension Management

The benefit of FDI in Pension Funds:

• Many companies need capital for their expansion and due to the increase in FDI limit, they will get more money.
• Existing fund holders will also be able to sell their excess stake.
• Foreign companies will be able to provide new products, technology.
• Help in increasing the reach of pensions.

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