India considers easing restrictions on gold in pension funds

[Ben Graham]

India’s pension regulator may look to relax its investment restrictions after calls by fund managers to boost their gold holdings in their portfolio, Bloomberg News has reported.

According to sources cited by Bloomberg, retirement fund managers held a series of meetings with senior officials from the Pension Fund Regulatory and Development Authority last month, requesting permission in invest in gold exchange-traded funds (ETFs). In addition, they also asked for relaxed rules around real estate investment trusts and infrastructure trusts.

The sources followed up by saying that the regulator is now considering the proposal, and has even sent draft documents on gold investments to the funds for feedback.

The request follows repeated calls in recent months by India’s pension industry seeking more flexibility in their investments. Under current regulations, gold, real estate and infrastructure funds are all treated as alternative assets in India, meaning they can only represent 5% of the country’s total investments in pension funds.

While the pension regulator is yet to agree to the proposed changes, the intention by fund managers to include gold ETFs is clear — as one of the best performing assets this year, gold would undoubtedly contribute to the funds’ goal of growing the retirement savings pool rapidly.

Bloomberg estimates that assets held in India’s pension funds have more than tripled since the pandemic, driven by economic growth and the country’s rising participation in the financial system.

The fund managers collectively manage about 15.5 trillion rupees ($177 billion), according to the report.

An easing of the 5% limit on gold ETFs would further boost the funds’ growth. Some of India’s largest gold ETFs have logged price increases of close to 30% so far in 2025, according to data compiled by Bloomberg.