PFRDA Proposes Two-Track Valuation To Protect Pension Savings From Market Swings
SDG 8: Decent Work and Economic Growth | SDG 9: Industry, Innovation and Infrastructure
Institutions: Ministry of Finance
The Pension Fund Regulatory and Development Authority (PFRDA) has issued a Consultation Paper proposing a dual valuation framework, accrual and fair market, for long-term Government Securities held by pension funds under the National Pension System (NPS) and Atal Pension Yojana (APY). Released on 21 October 2025, the paper aims to align valuation methods with the long-only investment horizon of pension funds and the objective of stable wealth accumulation for subscribers.
The proposal seeks to:
Depict stable, simplified wealth accumulation during the build-up phase;
Limit short-term volatility in Net Asset Values (NAVs) caused by temporary interest-rate swings; and
Channel pension capital toward long-term infrastructure investment, supporting India’s broader growth agenda.
By separating long-term accrual valuation from short-term market movements, PFRDA intends to enhance transparency, safeguard subscribers’ confidence, and strengthen fund governance. Stakeholder feedback is invited until 30 November 2025 via the PFRDA website’s Consultation Papers section.
The proposal reinforces pension system stability and capital-market depth by aligning valuation norms with long-term investment mandates. It could reduce herd-driven mark-to-market volatility, improve risk disclosure, and make pension funds more reliable anchors for financing infrastructure and green transition projects. This also supports the goals of National Monetisation Pipeline and Viksit Bharat 2047 by linking savings to productive assets.
What is PFRDA?→ The Pension Fund Regulatory and Development Authority regulates India’s pension sector, overseeing the NPS, APY, and related intermediaries. It ensures sound fund management, prudent risk practices, and protection of subscriber interests while promoting retirement savings.
What is NAV?→ Net Asset Value represents the market value of a fund’s assets minus its liabilities, divided by the number of units held. For long-only pension funds, large swings in NAVs from temporary rate movements can distort perceptions of true pension wealth, hence the push for a calibrated valuation approach.
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