Daijiworld Media Network – New Delhi
New Delhi, Jan 25: 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, recommend and modernise the investment framework under the National Pension System (NPS).
According to an official statement, the committee has been tasked with undertaking a comprehensive review of existing NPS investment guidelines, benchmarking them against leading global pension systems, and aligning them with the evolving Indian investment ecosystem. The objective is to strengthen NPS’s long-term retirement wealth creation capabilities, improve
diversification, enhance risk management practices and expand investment choices for subscribers.
The SAARG committee will be chaired by Narayan Ramachandran, former country head and CEO of Morgan Stanley India and current chairman of TeamLease Services Ltd. The panel comprises several eminent experts from capital markets, asset management and securities law, including former Sebi whole-time member Ananth Narayan, First Global founder and CMD Devina Mehra, DSP Mutual Fund MD and CEO Kalpen Parekh, former HDFC Mutual Fund CIO Prashant Jain, PPFAS Asset Management CIO Rajeev Thakkar, Motilal Oswal co-founder Raamdeo Agrawal, ICICI Prudential AMC CIO Sankaran Naren, Regstreet Law Advisors founder Sumit Agrawal, and PFRDA executive director Ashok Kumar Soni.
As per PFRDA, the committee’s mandate includes reviewing strategic asset allocation frameworks, evaluating the introduction of new asset classes, strengthening performance measurement and accountability mechanisms, improving asset-liability management (ALM) practices, reviewing valuation standards for alternative investments, and enhancing portfolio stability and liquidity management.
The panel will also examine governance and intermediary architecture within NPS, along with the integration of sustainability considerations such as climate transition risks and net-zero pathways into investment decision-making.
The detailed terms of reference provide for a foundational review of NPS investment guidelines across government and non-government sectors, global benchmarking, and recommendations for reforms. The committee will assess the feasibility of introducing new asset classes to mitigate geopolitical, macroeconomic and market-cycle risks, suggest optimal asset allocation across equity, debt, money market and alternative assets, and recommend prudential exposure and concentration limits.
Additionally, SAARG will review the existing performance benchmarking framework for pension funds, propose comprehensive risk management practices, and recommend ALM principles aligned with long-term pension liabilities. It will also examine valuation norms for Alternate Investment Funds (AIFs), explore the earmarking of government securities under the held-to-maturity category to enhance portfolio stability, and assess securities lending, borrowing mechanisms and triparty repo arrangements to improve liquidity.
Governance-related aspects, including custodial architecture and optimisation of end-to-end investment processes across NPS intermediaries, will also come under review. Enhancing subscriber investment options, including lifecycle and target-date products, and determining an optimal mix of active and passive investment strategies are also part of the mandate.
“The constitution of SAARG reflects PFRDA’s continued commitment to strengthening the NPS investment framework in a forward-looking manner and ensuring that it remains resilient, diversified and aligned with the evolving needs of subscribers,” the regulator said.
The committee has been given a tenure of nine months to examine the issues and submit its report along with recommendations to PFRDA.