Addressing an event organised by the Pension Fund Regulatory and Development Authority (PFRDA), Nageswaran said pension funds, given their long investment horizon and patient capital, are well suited to back long-term development projects that match their future liabilities.
He said a deep, well-governed pension ecosystem could simultaneously strengthen India’s growth story and provide liability-aware returns to subscribers.
Referring to global trends, Nageswaran noted that pension funds in many advanced economies have grappled with funding gaps, particularly during prolonged periods of ultra-low interest rates that encouraged greater risk-taking. Although rising interest rates have narrowed those gaps, he cautioned that new risks have emerged as pension funds increasingly allocate capital to illiquid and macro-sensitive assets.
He cited gold as one such example, saying that for a country like India, excessive investment in the metal also has implications for the balance of payments and may not be the most appropriate asset for domestic liability-driven funds.
The CEA also flagged the growing dominance of short-term investing in financial markets, observing that even institutions traditionally known for their long-term approach have shortened their investment horizons. Pursuing higher returns at the expense of pension obligations, he said, is a risk pension systems cannot afford.
Nageswaran added that the success of Viksit Bharat should not be measured solely by economic output, but also by the financial security and dignity it offers its elderly population. A truly developed nation, he said, is one where people can look forward to a financially secure retirement rather than uncertainty in old age.
(With PTI inputs)