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बेसिक इंग्लिश का दूसरा सत्र (कक्षा प्रारंभ : 22 अक्तूबर, शाम 3:30 से 5:30)
Q. Two classes of pensioner’s in new NPS: Comment on planned changes in National pension scheme.
Nov 12, 2016 Related to : GS Paper-3

Ans :


Recently it has been reported that, Pension Fund Authority of India is planning to let voluntary savers allocate up to 5 per cent of their the National Pension System portfolio in alternative investment funds (AIF) and real estate investment trusts (REITS). Many experts have lauded move, but some questioned need to create class of pensioners because same facility is not available for civil servants.


  • The creation of separate asset classes for REITS and AIFs gives individual savers the freedom to allocate savings based on their ability to take risks.
  • Real estate is an ideal asset class in rapidly urbanising India, similarly AIFs that feeds start-ups, which is very seriously promoted by government through various programmes. 
  • Earlier rules have been eased to allow pension fund managers to invest civil servant contributions in REITS as well, subject to a limit of 5% per cent. 
  • So, REITS must take off for pension fund managers to assess the risks and return, and for subscribers to participate in and gain from a real estate boom.


  • Unlike voluntary participants, civil servant, he/she does not have a choice on either the asset allocation or the fund manager. 
  • There is no reason why the NPS should restrict civil servants’ contributions’ to a maximum 15% exposure to the stock market, when voluntary savers can invest up to 50% of their portfolio in equities.
  • Hence they don’t have freedom to choose assets such as Reits or AIFs that carry risks but offer higher rewards, like other have. That must change. 
  • A new entrant to civil service or a young recruit would have the ability to allocate more of her savings to equities. The exposure can be lowered over time, given that the ability to take risks comes down with age.


Individual civil servants should be treated on par with voluntary savers. The need is to align investment rules of the NPS for civil servants and voluntary savers for all asset classes. 


The move of pension regulator to let voluntary savers allocate up to 5%of their National Pension System portfolio in AIF and REITs is welcome step. But it excludes civil servants from these initiatives. Hence regulators must include all sets of people, irrespective of voluntary contributions as well civil servants contribution.  Hence there is need of change in the present criteria.

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