Source: ET
Context:
The Pension Fund Regulatory and Development Authority (PFRDA) has issued a discussion paper proposing a dual valuation approach for securities held in the portfolios of the National Pension System (NPS) and the Atal Pension Yojana (APY). The move aims to make pension wealth accumulation more transparent and stable while strengthening the long-term investment character of pension funds.
Key Highlights:
- Dual Valuation Proposal:
- The regulator has proposed valuing a portion of the government securities (G-Secs) portfolio on an accrual basis (based on interest earned over time).
- The remaining portion would be valued on a mark-to-market (MTM) basis (reflecting current market prices).
- This “dual valuation” method is expected to balance prudence and realism by providing both stability and economic relevance in fund valuation.
- Objective of the Framework:
- To present pension wealth accumulation more clearly to subscribers.
- To ensure long-term financial stability and reflect the true economic purpose of pension investments.
- To align pension fund investments with long-term capital formation—especially in funding productive infrastructure assets with long gestation periods.
