Posted: 27 Jul 2012 06:27 AM PDT
The three NPS managers handling the pension funds of Central and state
government employees have delivered average returns of 9.33% in the past
one year, outperforming the state-run government provident fund (GPF),
employees provident fund (EPF) and the public provident fund (PPF). The
three-year annualised returns are also quite decent at 8.47%, though not
as spectacular as in the past one year.
More
than 16 lakh central and state government employees have almost Rs
8,500 crore invested in the NPS. This money is managed by three pension
fund managers - SBI Pension Funds, LIC Pension Fund and UTI Retirement
Solutions. Each of the three funds manages roughly one-third of the NPS
corpus.
Though three years is a very short
time to judge long-term instruments such as pension funds, the
impressive performance is likely to silence the criticism that NPS is
not allocating enough to growth assets. Central and state government NPS
funds can invest a maximum of 15% in equities. Even in NPS for the
general public, where investors can choose their own asset allocation, a
maximum of 50% can be put in equities.
RETURNS OF SCHEMES FOR GOVT. EMPLOYEES
| ||||
|
Central Govt.
|
State Govt.
| ||
1-Year
|
3-Year
|
1-Year
|
3-Year
| |
LIC Pension Fund
|
9.12%
|
8.20%
|
9.94%
|
9.17%
|
SBI Pension Fund
|
8.96%
|
7.83%
|
9.79%
|
9.13%
|
UTI Retirement
|
8.69%
|
7.36%
|
9.50%
|
9.18%
|
Average
|
8.92%
|
7.80%
|
9.74%
|
9.17%
|
The Pension Funds Regulatory and Development Authority has defended
this conservative allocation saying that pension funds should not have a
large exposure to risky assets.
The past few
years have proved it right. Equity markets have floundered in the past
one year, with the Nifty falling 6.5%. In the past three years, it has
delivered an annual average growth of 4.95%. But government securities
and other debt instruments have rallied in recent months following rate
cuts by the RBI. After a lacklustre two years between 2009 and 2011,
gilts shot up in 2012 as benchmark yields tumbled. The gilt funds
managed by the six fund managers of the NPS for the general public have
risen by almost 9.95% in the past one year. This has helped shore up the
overall returns from the NPS funds.
Courtesy:http://articles.
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