Pension Fund Regulatory and Development Authority allows pension funds to invest in realty sector

NEW DELHI: The pensions regulator has opened the doors of long-term retirement funds to the real estate sector, allowing the pension funds to invest up to 5% of their corpus in regulated real estate investment trusts.

A few thousand crores of the National Pension System (NPS) scheme could be invested in the funds starved real estate sector after the Pension Fund Regulatory and Development Authority (PFRDA) issued the new investment rules earlier this week.

The NPS has a corpus of Rs 86,000 crore. The revised guidelines will also apply to NPS Lite and Atal Pension Yojana. The government has allowed tax relief for investment up to Rs 50,000 in the NPS in the budget for 2015-16, which will further raise investment corpus of the scheme that already receives steady inflow of retirement savings of government employees.

The room for new asset classes has been created by cutting down the allocation for the government securities from 55% to 50%. The new investment structure is expected to help increase returns of the scheme. The new guidelines will apply from June 10. Under the new investment pattern notified by the PFRDA, pension funds can invest up to 50% of their corpus in government securities and related instruments.