Pension Fund Management in India: Government Role and Regulatory Issues

This Pension funds nowadays in India play a huge role in development of the economy and it play active role in the Indian equity markets. A change both in their investment attitudes and in the regulatory climate, encouraging them to increase their investment levels in equities and would have a massive impact on capital market and on the economy as a whole. This paper examines the potential and actual role played by government in pension fund management. It is shown that government played important role in investment performance in terms of risk and return, and pension funds are well placed to take advantage of the benefits, but pension fund typically hold low proportions equity on their portfolios which hamper its growth but at the same time low equity proportions means more safety for pension funds. Whereas some degree of “home bias” is likely to occur naturally, it is undesirable for regulations to enforce tighter limits on proportion of equities and there is thus considerable scope for improvement in the current system and other issue which needs attention for making the new pension scheme equitable is the tax treatment. KeywordsPension, Economy, Investment, Risk, Return,