PFRDA Sets Up Expert Panel to Revamp NPS Investments and Boost Long-Term Retirement Returns

PFRDA Constitutes Committee for Strategic Asset Allocation and Risk Governance (SAARG)

SAARG to undertake a comprehensive review of NPS investment guidelines to strengthen diversification, risk management, and long-term retirement wealth creation

27 January 2026,

The Pension Fund Regulatory and Development Authority (PFRDA) has constituted a high-level Committee of Investment Experts titled the Committee for Strategic Asset Allocation and Risk Governance (SAARG). The Committee has been set up to review, modernise, and recommend reforms to the investment framework governing the National Pension System (NPS).

SAARG has been mandated to conduct a comprehensive assessment of existing NPS investment guidelines, benchmarking them against leading global pension systems as well as developments in India’s evolving investment ecosystem. The overarching objective is to strengthen the NPS investment architecture so that it supports long-term retirement wealth creation, enhances portfolio diversification, improves risk management practices, and expands investment choice for subscribers.

Scope of Work

The Committee’s scope covers a wide range of strategic, operational, and governance aspects of pension fund investment management. These include:

• Review of strategic asset allocation frameworks, which determine long-term exposure to different asset classes such as equity, debt, and alternatives
• Evaluation and potential introduction of new asset classes to improve resilience across market cycles
• Assessment of performance measurement and accountability mechanisms for Pension Funds
• Review of Asset–Liability Management (ALM) practices to ensure alignment between long-term pension liabilities and investment strategy
• Development of valuation standards for alternative investments, including illiquid assets
• Measures for portfolio stability and liquidity optimisation
• Examination of governance structures and intermediary architecture within the NPS ecosystem
• Integration of sustainability and climate-related considerations into investment decision-making

The detailed Terms of Reference of SAARG are provided in the Annexure.

Composition of the Committee

SAARG will be chaired by Shri Narayan Ramachandran, former Country Head and CEO of Morgan Stanley India, currently Chairman of TeamLease Services Ltd. The Committee comprises eminent professionals with deep expertise in capital markets, asset management, regulation, and securities law.

Significance

The constitution of SAARG underscores PFRDA’s continued commitment to a forward-looking and resilient NPS investment framework, ensuring that it remains diversified, well-governed, and aligned with the evolving needs of subscribers over their long-term retirement savings journey.

The Committee will have a tenure of nine months to examine relevant issues and submit its recommendations to PFRDA.

Annexure: SAARG – Terms of Reference

The Committee shall be guided by the following Terms of Reference in discharging its mandate:

1. Foundational Review of NPS & Global Benchmarking

• Review existing NPS investment guidelines for Government and Non-Government sectors for adequacy, effectiveness, and long-term relevance
• Benchmark NPS investment architecture against leading global pension systems and comparable Indian investment frameworks

2. Asset Class Review and Expansion

• Review all currently permitted asset classes and recommend enhancements to improve diversification and retirement outcomes
• Recommend introduction of new asset classes to mitigate geopolitical, macroeconomic, and market-cycle risks

3. Strategic Asset Allocation Framework

• Recommend optimal long-term asset allocation across equity, debt, money market instruments, and alternative assets, balancing safety, liquidity, and returns
• Define the eligible investment universe within each asset class and prescribe prudential exposure and concentration limits

4. Performance Measurement & Accountability

• Review existing benchmarking systems and recommend appropriate benchmarks and methodologies for evaluating Pension Fund performance under NPS

5. Risk Management & Asset–Liability Management (ALM)

• Recommend comprehensive risk management practices covering market, credit, liquidity, concentration, and operational risks
• Recommend ALM principles aligned with the long-term nature of pension liabilities

6. Alternative Investments & Valuation Standards

• Recommend valuation principles for investments in Alternative Investment Funds (AIFs)
• Propose suitable investment strategies for AIFs, accounting for illiquidity, exit constraints, and long-term retirement objectives

7. Portfolio Stability & Liquidity Optimisation

• Recommend mechanisms such as earmarking a portion of Government Securities under a Held-to-Maturity (HTM) framework to enhance portfolio stability
• Examine the feasibility of Securities Lending and Borrowing Mechanisms (SLBM) to generate incremental returns
• Recommend enabling Triparty Repo arrangements for efficient liquidity management

8. Governance & NPS Intermediary Architecture

• Examine centralized versus Pension Fund-wise custodial structures for efficiency and resilience
• Review and optimise end-to-end investment process flows across NPS intermediaries

9. Sustainability Integration

• Assess the integration of climate transition risks and net-zero pathways into asset selection and portfolio construction under NPS

10. Subscriber Choice & Investment Design

• Review and enhance subscriber investment options, including lifecycle and target-date fund structures
• Recommend an optimal balance between active and passive investment strategies

11. Any Other Relevant Matter

• Advise on emerging issues affecting investment patterns, governance standards, risk management practices, and subscriber outcomes