LIC Pension Fund trumped its National Pension System (NPS) scheme peers to emerge as the numero uno in the government securities (g-sec) fund category. A consistent performer in this category, it yielded the highest returns annually over three and five-year horizons, recording 12.04 percent and 9.89 percent respectively, as per data from Value Research. It was followed by HDFC Pension, with returns of 11.49 percent and 8.93 percent respectively. All pension fund managers beat their mutual fund peers as well as the benchmark over three years, while all but one repeated this performance in the five-year return category too.
Change is in the air
NPS is set for an overhaul in the coming days, with the Pension Fund Regulatory and Development Authority (PFRDA) deciding to permit investments in initial public offerings (IPOs), follow-on public offers (FPOs) and offer-for-sale (OFS). The objective is to broaden the range of investment options available to pension fund managers and offer better returns to subscribers. According to PFRDA chairman Supratim Bandyopadhyay, the regulatory guidelines may specify the minimum IPO size to disallow investments in smaller public offers. Detailed guidelines are expected to be released soon.The Foreign Direct Investment (FDI) limit in pension fund management has been hiked from 49 percent to 74 percent. The pension regulator has invited applications from sponsors to new pension fund managers, along with a proposal to increase investment management charges, which are as low as one basis point at the moment. PFRDA has proposed four charge slabs linked to the funds’ assets under management (AUM). The maximum fee levied can go up to 0.09 percent while the floor is fixed at 0.03 percent. The charge structure does not include brokerage, custodian fees and taxes. For equity transactions, pension funds can charge a maximum brokerage of 0.03 percent.