Skip to main content

Question on Pension Funds.....answered !!!


On 1/7/12, Mukta Mantri <mantrimukta@yahoo.in> wrote:
> Just wanted to know if PENSION FUNDS are allowed to invest in stock markets?
> if so, what %? Bcoz, being the old age benefit scheme, it should not be
> investing in fluctuating markets as this would lead to uncertain returns and
> may lead to capital erosion.

Dear Mrs. Mantri Madam,

First and foremost I must congratulate you for you are asking the FIRST question in ET Univ. and a very good one at that.

Pension funds hold a major chunk of Institutional money....which is very important for the capital mkts. Now simply put maximizing returns with adequate safety is always the priority  for the Govt. Hence the funds do enter the capital mkts in parts. According to the New Pension Scheme 2004 guidelines contributor can choose from the investment options....Equity or Govt. Bonds or other forms of scheduled investments but if he has not chosen any, then the "Auto Option" is activated and depending on the age of the contributor his money is invested in all asset classes in a predefined percentage.....the younger the person the riskier the asset class.

Your argument regarding public money and capital erosion is fair but normally these contributions are for a very LONG PERIODS (15-20-30 yrs)and historically the capital mkts have given 15 - 20 % returns on investment in LONG Term, so cyclical fluctuations are set-off.

I hope I have answered your question. It was a pleasure!!!

Also I shall appreciate if you could ask more such lovely questions on the "ET UNIV. BLOG" it will be very useful for students' knowledge and discussions.

Regards,
Ravi Sahu
Asst. Prof.
HVPM MBA - Amt.

Comments

  1. Mayur S. JoshiJanuary 7, 2012 at 7:51 PM

    Mantri Madam.. Very good question & Ravi sir excellent explanation.. Thanks to both of you

    ReplyDelete
  2. Radhika KalantriJanuary 8, 2012 at 10:58 PM

    Very Good Explanation

    ReplyDelete

Post a Comment

Popular posts from this blog

Ram or Krishna whom to follow?

23 MAR, 2012, 11.34AM IST, DEVDUTT PATTANAIK, Management Mythos: What Krishna tells us about not being wrong in breaking rules, if dharma is upheld Narada had the power to travel through space and time. One day, he decided to pay a visit to Ayodhya , the city of the rule-following Ram and to Vrindavan, the village of the rule-breaking Krishna. At Ayodhya, he told the story of Krishna; the residents did not appreciate the rakish, mischievous cowherd at all. He is not serious at all, they said. At Vrindavan, he told the story of Ram; the residents did not appreciate the upright and rather serious king at all. He is no fun, they said. Narada then went to Hanuman, the mighty monkey, and asked him who he preferred : Ram or Krishna? And Hanuman said, "What is the difference? Both are Vishnu to me; Lakshmi follows him, whether he is Ram or Krishna." So what is the difference between Ram and Krishna? Both belong to two different contexts: Ram lives in Treta yuga and Krishna in Dvapar...
Post a Comment
Read more

The Superman with a Microphone!

  The Superman with a Microphone! Superman—that’s what you become the moment you step onto the stage with a microphone in hand. Public speaking or confident communication, whether on a dais or in a formal gathering, has always been a skill many aspire to master. From ancient orators to modern-day motivational speakers, the ability to command attention and inspire action has remained a powerful tool for change. Yet, becoming a successful speaker isn’t an enigma. With a little thoughtful preparation and consistent practice, anyone can unlock the superpowers of public speaking. Let’s decode the art of engaging communication and help you become the Superman with a Microphone. **Step 1: Work on the 'Who?' Before you step into your superhero shoes, ask yourself: Who is the audience? This question is crucial to setting the tone for your speech. Understanding your audience enables you to: Gauge their mindset and expectations. Determine their familiarity with the to...
1 comment
Read more

the way we look at things..

- The rose within- So Very true ! A certain man planted a rose and watered it faithfully and before it blossomed, he examined it. He saw the bud that would soon blossom, but noticed thorns upon the stem and he thought, "How can any beautiful flower come from a plant burdened with so many sharp thorns? Saddened by this thought, he neglected to water the rose, and just before it was ready to bloom... it died. So it is with many people. Within every soul there is a rose. The God-like qualities planted in us at birth, grow amid the thorns of our faults. Many of us look at ourselves and see only the thorns, the defects. We despair, thinking that nothing good can possibly come from us. We neglect to water the good within us, and eventually it dies. We never realize our potential. Some people do not see the rose within themselves; someone else must show it to them. One of the greatest gifts a person can possess is to be able to reach past the thorns of another, and find the ...
Post a Comment
Read more