The Pension Fund Regulatory and Development Authority (PFRDA) has set up an expert committee to review and modernise the investment framework of the National Pension System (NPS). The move aims to strengthen long-term retirement savings, improve risk management and align NPS investments with evolving market conditions and global best practices.
The nine-member panel, named the Strategic Asset Allocation and Risk Governance (SAARG) Committee, will be chaired by Narayan Ramachandran, former India head and CEO of Morgan Stanley. The committee includes experienced professionals from the fields of asset management, capital markets and financial research.
The National Pension System is a key retirement savings scheme in India, covering government employees, private sector workers and individual subscribers. Any changes to its investment framework are expected to have a significant impact on long-term pension savings and capital market participation.
According to PFRDA, the committee’s main task is to examine the current investment guidelines of NPS and suggest changes that can enhance returns while managing risks effectively. The review will cover strategic asset allocation, diversification across asset classes, and the overall investment structure followed by pension funds under NPS.
The committee will also study governance mechanisms, risk monitoring systems and performance measurement standards. Special focus will be placed on evaluating alternative asset classes such as real estate, infrastructure investment trusts (InvITs), real estate investment trusts (REITs) and private equity, along with their valuation and liquidity norms.
In addition, the panel will assess portfolio stability, liquidity management and the role of intermediaries within the NPS ecosystem. Another key area of review is the integration of environmental, social and governance (ESG) principles into investment decisions, reflecting the growing importance of sustainable investing.
The SAARG committee has been given a nine-month timeline to complete its review and submit recommendations to PFRDA. Based on these suggestions, the regulator may revise existing NPS investment rules to provide greater flexibility, stronger governance and improved retirement outcomes for subscribers.
Other members of the committee include well-known market experts such as Raamdeo Agrawal, Kalpen Parekh, Devina Mehra and Ananth Narayan.