As of 2015, the Pension Fund Regulatory and Development Authority (PFRDA) has allowed fund managers to invest in equity mutual funds in order to bring about pliability in investments. However, with fund managers taking advantage and investing their whole equity corpus or a majority of it in mutual funds, in August 2018, the Pension Fund Regulatory and Development Authority (PFRDA) brought about a restriction and has capped investments in mutual funds to just 5% of the entire equity corpus.
The recent announcement by the Pension Fund Regulatory and Development Authority (PFRDA) has affected fund managers like Kotak Mahindra Pension Fund Limited, who have invested their entire equity portfolio in mutual funds. Sandeep Shrikhande, the CEO of Kotak Mahindra Pension Fund, said that the company has already diluted 50% of the investments in mutual funds following the restriction of the pension regulator, and the rest will be diluted once the exit load period of certain funds gets over. In addition, Life Insurance Corporation Pension Fund has invested 11% of its equity corpus in mutual funds in the public sector and 13% of its equity corpus in the government sector.
The restriction of the equity corpus in mutual funds will be applicable for fresh investments as well.