The Pension Fund Regulatory and Development Authority (PFRDA) is set to introduce the ‘New Balanced Life Cycle Fund’ to enhance the attractiveness of the New Pension System (NPS) among the younger generation.
This initiative aims to assist subscribers in building substantial retirement funds.
Under the proposed scheme, there will be significant changes:
Extended Equity Investment Period
Currently, the reduction in equity investments begins at age 35. Under the new rules, this reduction will start at age 45, allowing subscribers to allocate more funds into equity investments for a longer period. This strategic adjustment aims to maximize retirement savings over time.
Launch Timeline: July-September Quarter
PFRDA Chairman Deepak Mohanty announced that the ‘New Balanced Life Cycle Fund’ will be launched in the upcoming July-September quarter.
This fund will facilitate extended allocation to equity share funds, promoting longer-term investment strategies.
Balancing Risk and Return
Mohanty highlighted that the revised NPS scheme will strike a balance between risk and return by gradually reducing equity investments from age 45 onwards.
This approach enables prolonged exposure to equity funds, potentially increasing pension funds in the long run.
Record Growth in Atal Pension Scheme
In a related development, Mohanty disclosed that the Atal Pension Scheme (APY) witnessed substantial growth, with 1.22 lakh new subscribers joining in the last fiscal year 2023-24.
This surge marks the highest annual enrollment since the scheme’s inception. PFRDA anticipates a further increase to 1.3 crore subscribers in the current fiscal year, projecting a total enrollment surpassing 6.62 crores by June 2024.
