PFRDA prepares guaranteed return scheme under NPS:Committee to draft a framework ensuring minimum returns for risk-averse investors

The Pension Fund Regulatory and Development Authority (PFRDA) is planning to introduce a guaranteed return option under the National Pension System (NPS). To take this forward, PFRDA has set up an internal expert committee to draft the framework for the Minimum Assured Return Scheme (MARS). Once the committee submits its report, it will be placed in the public domain for consultation and feedback. PFRDA Chairman S. Raman said the objective is to design a scheme that is sustainable for pension funds while offering assured minimum returns to subscribers. Designed for risk-averse investors At present, NPS is entirely market-linked, with returns dependent on equity, corporate bonds, and government securities. While long-term returns have been strong, many investors prefer fixed and predictable returns. MARS is being developed to meet the needs of such risk-averse subscribers. Guarantee may come at a cost Under the proposed scheme, pension fund managers will be required to offer guaranteed returns. However, experts say this could mean: Consultants’ studies to guide framework PFRDA has been working on this proposal for some time and had earlier engaged external consultants to assess its feasibility. The new committee will use those findings to prepare a formal regulatory framework. Move to expand NPS reach The initiative is expected to widen the appeal of NPS, especially among investors looking for safe retirement savings options amid market volatility. PFRDA is also working to simplify onboarding and enhance features of the Systematic Withdrawal Plan (SWP) to make NPS more attractive.