MARKET WATCH PENSION REGULATOR RESTRICTS NPS INVESTMENTS TO SENSEX, NIFTY COS

The Pension Fund Regulatory and Development Authority (PFRDA) has said that the money from the New Pension Scheme (NPS) will flow only to those infrastructure companies that find a place in the BSE Sensex or the NSE Nifty. Thus, the interim pension regulator has ruled-out direct lending to any infrastructure project or a particular core sector company.

"They (pension fund managers) can invest the money in companies that are represented in the index and in the same weightage. So they have to track either the Sensex-30 or the Nifty-50," PFRDA Chairman, Mr D. Swarup, told Business Line. "We don't intend to direct our fund managers to lend money directly for infrastructure companies. There is no direct lending to any project per se in our scheme. This will not happen in future also," Mr Swarup said.

Investing on the basis of weightage of companies in the BSE or NSE indices would mean if a company has 2.5 per cent weightage in Nifty-50, then only Rs 2.50 of an individual's total money of Rs 100 would go into that company.

This would ensure that risks are diversified and contained and yet the subscriber gets good returns, he said.

Mr Swarup said NPS fund managers are not allowed to do individual stock picking due to apprehensions that their links to a particular company may make them invest in it. This, in turn, may put the subscribers' money at risk.
from BUSINESS LINE