India. Why pension funds are a good bet for investors
They are regulated by India’s Pension Fund & Regulatory Development Authority
Q: Investment in pension funds is becoming quite popular. As I am returning to India for good this year, I want to know how safe and secure these funds are and whether they are properly regulated?
A: Pension funds are regulated by the Pension Fund & Regulatory Development Authority (PFRDA). This authority exercises control over pension fund managers (PFM). The PFMs are permitted to invest only in corporate bonds which have at least a AA rating. It is possible that this may be enhanced to AAA rating in the near future. The PFRDA has now set up a committee to streamline the investment norms.
PFMs are required to do their due diligence on companies in which they wish to invest. Tighter regulations would entail higher capital adequacy requirements. There would be greater scrutiny in respect of asset-liability mismatch. Therefore, it is reasonably safe for investors to diversify by making investments in pension funds.
Q: I am planning to buy a house either in Mumbai or Bengaluru. Several projects are being advertised on builders’ websites. As I am visiting India in the next few days, I would like to go to the proposed building site. Will I be able to get adequate information if I do so in order to take a definite view to book the property?
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