InvestorQ : What will happen if NPS subscribers get assured minimum returns?
Tanya Mehta made post

What will happen if NPS subscribers get assured minimum returns?

Answer
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1 year ago


National Pension Scheme (NPS) is a voluntary pension scheme designed by the Pension Fund Regulatory and Development Authority (PFRDA) to cater to all Indian citizens. It invests money in corporate and government bonds, equity, fixed deposits, liquid funds, etc, but offers no fixed returns or assured returns. In fact, the PFRDA Act 2013 clearly states that there shall not be any implicit or explicit assurance of benefits except market-based guarantee mechanism to be purchased by the subscriber. Sources say subscribers of NPS will soon get to decide the fund option that comes with a minimum assured return. As of now, the returns in NPS are linked to the performance of the underlying securities such as equity, debt or a mix of both. The reason for the expectation that NPS subscribers will get minimum assured returns comes from the fact that the Pension Fund Regulatory and Development Authority (PFRDA) has invited an Expression of Interest from leading actuarial firms for designing and development of a Minimum Assured Return Scheme (MARS) for NPS subscribers. Thus, while returns may not be fixed, under MARS, it could be minimum returns given to subscribers over a specific period of time.