Government employees looking to increase the equity exposure of their National Pension System (NPS) corpus to above the current cap of 15% may soon have that option. An expert committee, appointed by the Pension Fund Regulatory and Development Authority (PFRDA), has proposed the government employees be given the option of investing up to 50% of their NPS fund in equities, as is the case with the corporate-sector staff.

Analysts discounted the possibility of a big rush among the government staff, characteristically risk-averse, to turn more towards equity investments. Even as the combined NPS corpus (asset under management or AUM) of the central and state government employees stood at close to Rs73,000 crore at the end of March 2015, the average exposure of these funds to equity was a mere 9%, significantly below the ceiling of 15%. The private sector NPS users, whose corpus is just 7% of the total AUM of Rs80,855 crore (as at FY15-end), have barely used up the equity window. Just 16% of their corpus is invested in equity instruments.

Suggesting that the relative under-performance of the stock market for a few years till FY14 must have added to the government employees turning away from equities, PFRDA chairman Hemant G Contractor said the trend could change in the current fiscal year.

To multiply NPS users’ equity investment avenues, the Bajpai panel has also recommended investing the funds in private equities, venture capital funds and exchange traded funds, subject to the overall cap.