The Pension Fund Regulatory and Development Authority (PFRDA) is about to launch a guaranteed return scheme called Minimum Assured Return Scheme (MARS). This scheme is launched to supply people from the salaried class with an option for their investments.
PFRDA has appointed EY Actuarial Services LLP as a consultant to assist in designing the proposed MARS under National Pension Scheme (NPS).
It will be the primary scheme of pension regulators, to supply a guaranteed return to investors. However, only the ground is ready in the proposed scheme. The consultant is likely to figure out the framework within.
Returns Offered By Scheme
Actual returns offered by the scheme will rely on the market conditions. Any shortfall is made good by the sponsor, while the excess is going to be credited to the subscribers’ accounts.
Fixed Guarantee Option– thereunder, the guaranteed rate of return is fixed along with the buildup phase. Floating Guarantee Option– under that, the guaranteed rate of return isn’t fixed along with the savings phase.
It depends on the event of a 1-year charge per unit until retirement. rate of interest is assigned to every annual contribution made in the current year.
This selection is analogous to the ATP system in Denmark, where 80% of contributions are guaranteed on the idea of rates that ATP can obtain in the market when contributions are paid.
As per the present plan, lock-in could also be applicable to each contribution. It will be applied on the premise of the period since that contribution has been made. it’s going to also consider multiple lock-in period options for flexibility.
however, it is expected that Withdrawals are to be directly linked to the lock-in period. Subscribers will have the choice to remain invested or withdraw after the lock-in period. However, what important is to understand that there won’t be any guarantee applied on investment after lock-in.