New pension money to be invested in stocks

New Delhi: With the support of 19 states and despite opposition from Left parties, the Centre has decided to notify an interim investment pattern for funds collected under the New Pension Scheme that will allow putting in a part of such amount in stock markets.

The new pattern would give an option for investing five per cent of the amount in stock markets and would also have the option of putting all the money in government bonds, said finance minister P Chidambaram after a meeting with all state representatives.

The Left-ruled states of West Bengal, Kerala and Tripura have however, voiced vehement opposition to the proposed investment pattern for NPS and are also against the Pension Fund Regulatory and Development Authority (PFRDA) Bill, pending in Parliament.

However, NDA-ruled states demanded expeditious passage of the Bill.

The NPS says that non-government provident funds can now invest up to 5 per cent of their corpus in shares of companies with investment grade debt rating from two rating agencies, 25 per cent in central government securities, 15 per cent in state government securities, 25 per cent in bonds and securities of public financial institutions and the balance in any of these three categories.

Till date, all funds collected from new government recruits under the NPS (about Rs1,500 crore) were deposited with the Public Account of India. This yielded a return of only 8 per cent per annum to the subscribers.