**Executive Summary**
The Pension Fund Regulatory and Development Authority (PFRDA) has established the Committee for Strategic Asset Allocation and Risk Governance (SAARG) to review and modernize the investment framework under the National Pension System (NPS). The SAARG aims to enhance diversification, improve risk management, and foster long-term retirement wealth creation. The committee has a timeframe of 9 months to examine and submit its report with recommendations to the PFRDA.
**Key Points / Main Content**
* **Committee Formation and Purpose:**
* The PFRDA constituted SAARG to review and modernize the NPS investment framework.
* The objective is to strengthen NPS investment architecture for long-term retirement wealth creation, diversification, risk management, and subscriber choice.
* **Scope of Review:**
* Examine strategic asset allocation frameworks, asset classes, performance measurement, ALM practices, valuation standards, portfolio stability, liquidity optimization, governance, intermediary architecture, and sustainability considerations.
* The detailed Terms of Reference are in the Annexure.
* **Committee Composition:**
* SAARG is chaired by Shri Narayan Ramachandran.
* It comprises experts from capital markets, asset management, and securities law.
* **Terms of Reference for SAARG:**
* *Foundational Review of NPS & Global Benchmarking:* Review existing NPS investment guidelines and benchmark against global pension systems.
* *Asset Class Review and Expansion:* Review asset classes and suggest enhancements to improve diversification. Introduction of new asset classes.
* *Strategic Asset Allocation Framework:* Recommend optimal strategic asset allocation across assets and define eligible investment universe.
* *Performance Measurement & Accountability:* Examine benchmarking system and recommend methodologies for evaluating Pension Fund performance.
* *Risk Management & ALM Architecture:* Recommend comprehensive risk management practices and Asset-Liability Management principles.
* *Alternative Investments & Valuation Standards:* Recommend valuation principles and investment strategies for AIFs.
* *Portfolio Stability & Liquidity Optimisation:* Recommend modalities for earmarking G-Secs under Held-to-Maturity and examine Securities Lending & Borrowing Mechanism.
* *Governance & NPS Intermediary Architecture:* Examine custodial architecture and review investment process flow.
* *Sustainability Integration:* Assess embedding climate transition risks and net-zero pathways in asset selection.
* *Subscriber Choice & Investment Design:* Review subscriber investment choices.
* *Any other important matter:* Recommend on matters impacting investment patterns, governance, risk management and subscriber outcomes.
**Impact Analysis**
**Pension Fund Regulatory and Development Authority (PFRDA)**
* **Impact**: The PFRDA will receive recommendations from the SAARG to improve the NPS investment framework.
* **Action Required**: The PFRDA needs to review the report submitted by SAARG after 9 months and implement changes to strengthen the NPS framework and enhance the investment environment.
**NPS Subscribers**
* **Impact**: Subscribers will benefit from improved investment strategies, diversification, risk management, and enhanced choices within the NPS, potentially leading to better long-term retirement wealth creation.
* **Action Required**: Subscribers should stay informed about any changes implemented in the NPS based on SAARG's recommendations to make informed investment decisions.
**Investment Experts and Committee Members**
* **Impact:** The committee members are responsible for leveraging their expertise to review the current investment landscape and provide recommendations.
* **Action Required:** The committee members must actively participate in the review process and submit a comprehensive report to the PFRDA within the 9-month timeframe.
Key Entities Referenced
Pension Fund Regulatory and Development Authority (PFRDA): The regulator for pension funds in India that constituted the SAARG committee.
Committee for Strategic Asset Allocation and Risk Governance (SAARG): A committee constituted by PFRDA to review and modernize the investment framework under the NPS.
National Pension System (NPS): The pension system whose investment guidelines are being reviewed by the SAARG committee.
Ministry of Finance
PFRDA constitutes Committee for Strategic
Asset Allocation and Risk Governance (SAARG)
SAARG to undertake comprehensive review of NPS
investment guidelines to enhance diversification, risk
management and long-term retirement wealth creation
प्रव तथ: 25 JAN 2026 8:19PM by PIB Delhi
The PFRDA has constituted a committee of Investment Experts for Strategic Asset Allocation and Risk
Governance (SAARG) to review, recommend and modernize the investment framework under the NPS.
SAARG has been tasked with undertaking a comprehensive review of the existing NPS investment
guidelines benchmarking them with leading global pension systems and the evolving Indian investment
ecosystem. The objective is to strengthen the investment architecture of NPS to support long-term
retirement wealth creation, enhance diversification, improve risk management practices and expand
subscriber choice.
The scope of the SAARG includes examination of strategic asset allocation frameworks, introduction and
review of asset classes, performance measurement and accountability mechanisms, ALM practices,
valuation standards for alternative investments, portfolio stability and liquidity optimisation measures,
governance and intermediary architecture, and integration of sustainability considerations in investment
decision-making. The detailed Terms of Reference is placed at Annexure.
SAARG shall be chaired by Shri Narayan Ramachandran, former Country Head and CEO of Morgan
Stanley India, and comprises eminent experts from the fields of capital markets, asset management and
securities law.
No. Name of Expert Affiliation
1 Shri Narayan Ramachandran Former Country Head and CEO of Morgan Stanley
India
Currently, Chairman at Team Lease Services Ltd.
2 Shri Ananth Narayan Former Whole Time Member, SEBI
3 Ms Devina Mehra Founder & CMD First Global (PMS & Global funds)
3 Shri Kalpen Parekh MD & CEO at DSP Mutual Fund4 Shri Prashant Jain CIO at 3P Investment Managers & Former CIO at
HDFC Mutual Fund
5 Shri Rajeev Thakkar Chief Investment Officer at PPFAS Asset
Management Pvt. Ltd.
6 Shri Raamdeo Agrawal Co-founder, Motilal Oswal
&
Chairman and Co-founder of Motilal Oswal
Financial Services Ltd.
7 Shri Sankaran Naren Chief Investment Officer at ICICI Prudential AMC
Ltd
8 Shri Sumit Agrawal Founder, Regstreet Law Advisors
9 Shri Ashok Kumar Soni Executive Director, PFRDA
The constitution of SAARG reflects PFRDA’s continued commitment to strengthening the NPS
investment framework in a forward-looking manner and ensuring that it remains resilient, diversified and
aligned with the evolving needs of subscribers in their long-term wealth creation journey.
The committee shall have a time of 9 months examine and submit its report to PFRDA with its
recommendations.
Annexure – SAARG’s Terms of Reference
The Committee shall be guided by the following terms of reference in the discharge of its mandate:
i. Foundational Review of NPS & Global Benchmarking:
Review existing NPS investment guidelines for Government and Non-Government Sectors for
adequacy, effectiveness and long-term relevance.
Benchmark NPS investment architecture with leading global pension systems and Indian peer
investment ecosystem and recommend reforms.
ii. Asset Class Review and Expansion:
Review all permitted asset classes and suggest enhancements to improve diversification and long-
term retirement wealth creation
Introduction of new asset classes to mitigate geopolitical, macroeconomic and market-cycle risks.
iii. Strategic Asset Allocation Framework:
Recommend optimal strategic asset allocation across equity, debt, money market and alternate
assets balancing safety, liquidity and returns.
Define eligible investment universe under each asset class and recommend prudential exposure and
concentration limits.
iv. Performance Measurement & Accountability:Examine the existing benchmarking system and recommend appropriate benchmarks and
methodologies for evaluating Pension Fund performance under NPS.
v. Risk Management & ALM Architecture:
Recommend comprehensive risk management practices covering market, credit, liquidity,
concentration and operational risks
Recommend Asset–Liability Management (ALM) principles aligned with long-term pension
liabilities
vi. Alternative Investments & Valuation Standards:
Recommend valuation principles for Alternate Investment Funds (AIFs).
Recommend suitable investment strategies for AIFs considering illiquidity, exit constraints and
long-term retirement objectives.
vii. Portfolio Stability & Liquidity Optimisation:
Recommend modalities for earmarking a portion of G-Secs under Held-to-Maturity (HTM) to
enhance portfolio stability.
Examine feasibility of Securities Lending & Borrowing Mechanism (SLBM) for generating
additional wealth creation opportunities for NPS Subscribers.
Recommend enabling Triparty Repo arrangements for efficient liquidity management.
viii. Governance & NPS Intermediary Architecture:
Examine centralized vs Pension Fund-wise custodial architecture for efficiency and resilience
Review and optimise end-to-end investment process flow across NPS intermediaries.
ix. Sustainability Integration:
Assess embedding climate transition risks and net-zero pathways in asset selection under NPS
x. Subscriber Choice & Investment Design:
Review and enhance existing subscriber investment choices including lifecycle and target-date
structures.
Recommend optimal mix of active and passive investment strategies.
xi. Any other important matter:
Recommend on any other emerging matter impacting investment patterns, governance, risk
management and subscriber outcomes
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NB/AD
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