Now the employee can invest his pension fund in market using New Pension System NPS. Pension fund regulatory and Development Authority PFRDA has constituted a committee to regularize the plan. HDFC chief Deepak Parekh is chairman of this committee. The Pension fund regulators have shortlisted nine fund managers including LIC, SBI and UTI. Its mandatory for them to invest up to 50% of an individual’s pension fund in equities.
Anyone can join NPS with a proposed minimum income of Rs. 6000 per annum. At the time of retirement the employee will get 60% of total amount earned by investment and rest 40% will be deposited with the fund manager of employee choice which will be used to give the monthly pension. Those employees who do not make any choice of pension funds will be automatically switched to life cycle fund.