India mulls allowing bespoke pensions in $175 billion industry

India’s retirement fund regulator is planning to permit individual pension houses to launch tailor-made investment plans in what could be a major overhaul for the $175 billion industry, according to people familiar with the matter.

The Pension Fund Regulatory and Development Authority, or PFRDA, has held several rounds of discussions with fund managers on the potential change, which is aimed at boosting the growth of the pension industry in India, said the people, who asked not to be identified because the information is private.

Even though India’s pensions are growing quickly, pensioners in the country generally have little flexibility in how their savings are invested as the regulator sought to control risks. Typically, managers of funds like SBI Pension Fund Pvt. Ltd. or ICICI Prudential Pension Fund buy securities to match the asset mix of plans predetermined by the PFRDA.

If the new proposal were approved, pension fund houses could create their own bespoke products catering to a wider range of investor preferences and risk appetite, said the people. That would allow the funds to advertise a wider range of potential returns, and target customers more specifically. For instance, one possibility is a pension plan aimed at women, the people said.