India Mulls Expanding Pension Investments To Include Gold ETFs
The ask is the latest in a string of requests by the pension industry seeking more flexibility in how the funds can invest a growing pool of savings.
India’s pension regulator is considering easing investment restrictions after portfolio managers pushed for new ways to boost returns on a rapidly growing pool of retirement money, according to people familiar with the matter.
Retirement fund managers met senior officials from the Pension Fund Regulatory and Development Authority in a series of meetings late last month and requested permission to invest in gold ETFs, the people said, asking not to be named discussing private matters. The regulator is considering the proposal, and has sent draft language on gold investments to the funds for feedback, the people said.
The pensions funds, which collectively manage about Rs 15.5 trillion ($177 billion) also asked for eased rules around real estate investment trusts and infrastructure trusts, they said. Currently, those funds are treated as alternative assets, and subject to a rule capping them at 5% of the pension’s overall investments.
The ask is the latest in a string of requests by the pension industry seeking more flexibility in how the funds can invest a growing pool of savings. Pension assets have more than tripled since the pandemic, driven by India’s economic growth and rising participation in the financial system.
In the last few months, managers have asked through an industry group for easier rules on the tenor and rating of securities they can buy, though the regulator hasn’t yet decided on the changes the pensions are seeking.
A senior official of the PFRDA declined to comment on the matter.
Gold and REITs
The appeal of gold investment for the pensions is clear this year - some of India’s largest gold ETFs - such as Nippon India ETF Gold, SBI ETF Gold and HDFC Gold ETF have logged price increases of close to 30% so far in 2025, according to data compiled by Bloomberg.
Investments under the so-called National Pension System are organized into four buckets: equities, corporate bonds, government bonds and alternative investment funds, which include instruments such as REITs and infrastructure investment trusts, or InVITs. Investments in the alternative funds are capped at 5% of assets.
Pension funds have asked the regulator to either relax that limit or shift REITs and InVITs to the category that includes corporate bonds, the people said. That would allow more investment in REITs and InVITs instruments, which have outperformed this year, they said.
