How PFRDA's nod to gold, silver ETFs will alter retirement investment playbook - expert explains

The Pension Fund Regulatory and Development Authority (PFRDA) has rolled out a major overhaul of the National Pension System (NPS), significantly expanding the range of assets in which pension funds can invest. The move allows exposure to gold and silver exchange-traded funds (ETFs), Real Estate Investment Trusts (REITs), equity-oriented Alternative Investment Funds (AIFs) and a broader universe of equities, marking a decisive shift toward a more diversified, multi-asset pension framework.

Market participants see the decision as a structural change in how long-term retirement savings will be deployed. Alok Jain, Founder of Weekend Investing, said the inclusion of gold and silver ETFs signals a clear change in the government’s stance toward precious metals. “For the first time, pension funds are being allowed to systematically accumulate gold and silver. This is not a tactical tweak but a long-term structural rewiring of capital flows,” he said.

Under the revised framework, pension funds can now invest in ETFs tracking gold and silver, while equity exposure has been expanded from the top 200 stocks to the top 250 stocks by market capitalisation. According to Jain, this reduces concentration risk and allows pension portfolios to capture a broader representation of the Indian equity market. While the allocation to metals is currently capped at low levels—up to 1% of total assets for government schemes and up to 5% of the equity allocation for private pension funds—it opens the door for higher limits in the future.

Pension fund assets under management stood at around Rs 16 lakh crore as of November 2025. Even a small allocation to gold and silver could translate into meaningful incremental demand over time. 

Jain noted that precious metals, long treated as alternative or hedging assets, have delivered competitive returns over the past two decades. “What we are witnessing is a shift from gold and silver being seen as alternatives to being recognised as core assets,” he said.

Investment in gold, silver

Historically, Indian policy has been restrictive toward precious metals, with high import duties and capital gains taxes discouraging formal financial participation. This contrasts with countries such as China, Russia and Turkey, where governments have actively encouraged gold ownership.

Jain said the PFRDA’s decision represents a fundamental change in thinking, suggesting that policymakers now see a role for hard assets within the formal retirement ecosystem.

The reforms also come at a time when silver ETFs in India are trading at discounts despite a strong rally in silver prices. Jain pointed out that while silver prices have surged, retail participation remains muted, leading to persistent ETF discounts. He described this as a classic early-stage bull market dynamic, where prices rise ahead of broad investor conviction. Gold, by contrast, has shown steadier participation and recently broke out to fresh highs without significant ETF premiums or discounts.

Beyond domestic factors, global developments are also supportive for precious metals. Jain cited reports of large quantities of silver being exported from China to India and growing concerns around currency stability. “Hard assets, quality equities, real estate and precious metals help preserve wealth regardless of currency movements,” he said.