PFRDA Forms SAARG Committee To Strengthen NPS Investment And Boost Retirement Wealth Creation

The Pension Fund Regulatory and Development Authority (PFRDA) has set up a new committee, ‘Strategic Asset Allocation and Risk Governance (SAARG)’, with an aim to ensure the long-term financial stability of millions of NPS subscribers. The committee is tasked with the responsibility of modernising NPS investment architecture for long-term wealth creation. It is required to review various aspects in the NPS investment framework, including risk management, diversification, etc., and provide recommendations within nine months.

On January 25, 2026, PFRDA announced forming this high-level committee, which will be chaired by Narayan Ramachandran, former Country Head and CEO of Morgan Stanley India. The committee will have experts from other financial domains, like capital markets, asset management companies, securities law advisors, and PFRDA.

The committee is expected to provide a “Strategic asset allocation” by recommending a long-term mix of equities, corporate bonds, and government securities to maximise returns and maintain safety.  

Terms Of Reference (ToR)

• The committee will review NPS investment guidelines for government and non-government sectors and benchmark NPS investments with the global pension system and peer investment ecosystem in India.  

• It will review the existing asset classes permitted for investments, and recommend any new asset class if suitable, ways to improve diversification, and reduce the macroeconomic risks.

• The committee will provide recommendations regarding strategic asset allocation across asset classes, to balance risk, returns, and liquidity, and also define the “eligible investment universe” for each asset class, prudential exposure into it, and concentration limits.

• It will be required to recommend comprehensive risk management practices, long-term pension liabilities, and asset-liability management (ALM) principles. Further, the committee will also be required to provide recommendations on alternative investment funds’ (AIFs) valuation and AIF investment strategies, considering the exit constraints.

• For this, the SAARG will examine the existing benchmarks and recommend an appropriate benchmark to compare and methodologies to evaluate the NPS pension fund performance.

• Other terms include examining the custodial architecture and recommending ways to optimize the investment process flow across NPS intermediaries. Review and recommend ways to increase investment choices for subscribers, including life cycle and other schemes, and suggest an optimum mix of active and passive investment.

Additionally, the committee will assess the climate transition risks in asset selection. It will examine Securities Lending and Borrowing Mechanism (SLBM) and its feasibility to generate additional wealth, recommend formalities for keeping a part of government securities investment until maturity to provide stability to portfolios, and enable Tri-party repo arrangement for enhanced liquidity management.

The committee is free to recommend any other changes required that can affect investment, governance, risks, and returns.

PFRDA has constituted another expert committee a few days back, to recommend ways to provide an assured return in NPS. These initiatives aim to enhance investment choices, pension security, and minimise risks.