PFRDA Constitutes SAARG Committee to Review NPS Investment Framework

The Pension Fund Regulatory and Development Authority (PFRDA) has constituted a high-level expert committee titled Strategic Asset Allocation and Risk Governance (SAARG) to review and modernise the investment framework of the National Pension System (NPS).

The committee has been formed with the objective of strengthening the long-term investment architecture of NPS by improving diversification, enhancing risk management practices and expanding investment choices available to subscribers.

Mandate of the Committee

SAARG has been tasked with undertaking a comprehensive review of existing NPS investment guidelines for both government and non-government sectors. The review will include benchmarking India’s pension investment framework with leading global pension systems as well as the evolving domestic investment ecosystem.

The committee will examine a wide range of issues, including strategic asset allocation frameworks, introduction and review of asset classes, performance measurement systems, accountability mechanisms, asset-liability management (ALM) practices, valuation standards for alternative investments, portfolio stability and liquidity optimisation. Governance structures, intermediary architecture and integration of sustainability considerations into investment decision-making will also fall within its scope.

Composition and Chairmanship

The committee will be chaired by Shri Narayan Ramachandran, former Country Head and CEO of Morgan Stanley India and currently Chairman of TeamLease Services Ltd. It comprises eminent professionals drawn from the fields of capital markets, asset management and securities law.

Members of the committee include Shri Ananth Narayan, former Whole Time Member of SEBI; Ms Devina Mehra, Founder and CMD of First Global; Shri Kalpen Parekh, MD and CEO of DSP Mutual Fund; Shri Prashant Jain, CIO at 3P Investment Managers and former CIO of HDFC Mutual Fund; Shri Rajeev Thakkar, CIO at PPFAS Asset Management; Shri Raamdeo Agrawal, Co-founder of Motilal Oswal; Shri Sankaran Naren, CIO at ICICI Prudential AMC; Shri Sumit Agrawal, Founder of Regstreet Law Advisors; and Shri Ashok Kumar Soni, Executive Director, PFRDA.

Key Areas of Review

The Terms of Reference of SAARG include reviewing and expanding permissible asset classes, recommending optimal strategic asset allocation across equity, debt, money market and alternative assets, and strengthening benchmarking and performance evaluation mechanisms for pension funds.

The committee will also assess valuation standards for alternative investments, examine measures to enhance portfolio stability and liquidity, review governance and custodial architecture, and explore the integration of sustainability and climate transition risks into NPS investment decisions. Enhancing subscriber choice through lifecycle and target-date investment options is another key focus area.

Timeline

The committee has been given a period of nine months to complete its review and submit its recommendations to PFRDA.

PFRDA stated that the constitution of SAARG reflects its continued commitment to ensuring that the NPS investment framework remains resilient, forward-looking and aligned with the long-term retirement needs of subscribers.

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