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Kurian Jose, CEO, Tata Pension Fund, says PFRDA is working on making pension and retirement products appealing to youth and has introduced investing through QR code. Also, the rules to withdraw money partially from the National Pension System (NPS) were changed starting February 1, 2024, whereby an NPS subscriber is allowed to withdraw from his pension account if it has completed three years. An NPS account holder can withdraw up to 25% of his contributions but the withdrawal cannot be made from the portion of the corpus contributed by the employer. What were the changes brought in by the Pension Fund Regulatory & Development Authority (PFRDA) last month?Kurian Jose: We keep saying that NPS is a tax saving season. I think it is an all-season product and it should treated as an all-season product. It just so happens that human tendency is to keep everything for the last moment. So, for tax purposes, Jan-Feb-March becomes the last moment, it becomes a tax saving season. But I believe that it is an all-season product. Coming to the changes, I think quite a few interesting changes have been brought in by PFRDA to make it a little bit more simpler because finance as a subject tends to be a little difficult and most people get put off as soon as you talk about finance. PFRDA wants people to think about retirement and pension when they are young because by the time people start investing and thinking about retirement, it is too late. Initially, you want to build a house and have EMIs to pay or pay for rentals and then everybody keeps saying like at 25, it is too early for me to think of retirement. I think what PFRDA is trying to do is talk to the young people. Quite a bit of work has been done in the digital space. They have introduced something called investing through a QR code and that is because most consumers today are used to just opening a smartphone, scanning a QR code and just getting invested. So, there is a Demat account and a QR code. I think the systematic withdrawal plan, systematic lump sum withdrawal, or SLW, has been a great introduction that has come in. Earlier, people used to invest till they were 60. At 60, they could take a lump sum money out tax-free and with 40%, you had to buy an annuity. Now, what it allows you to do is you can stay invested till you are 75. You can invest from 18 to 70. But you can stay invested till 75. So, there is no compulsion for you to take the money out at 60. You can let the money grow and money grows pretty well, compounds pretty wellLooking at the last 10-year returns, equity has given about 15% to 17%. G-Sec has given about 11%. Corporate bonds have given about 9%. So, allow your money to stay invested. And the power of compounding is the eighth wonder of the world. Withdraw the money as per your requirement. You can withdraw it quarterly, half yearly, or yearly.After 60?Kurian Jose: After 60, yes. So, till 60, the money stays locked in. After 60, you can keep 60% of the money as corpus and let it grow. With 40%, you necessarily have to buy an annuity.Something on partial withdrawals also?Kurian Jose: Yes, partial withdrawal, what is happening is you can withdraw till you are 60, but only up to 25% of your corpus. So, any money that you have put in on yourself. So, there are three ways of investing. So, one is the all-citizen model, where you and I can invest, for which you get the 80C benefit. Then, you have that Rs 50,000 which you get 80CCD(1B), that is again, your contribution. But there is something, the income tax advantage that you get, which is the 80CCD(2), which is the corporate deduction, the corporate NPS, which is very popular. There, what happens is the company deducts or invests on your behalf. Obviously, the CTC does not change, but that is seen as the employer contribution. That is an aspect you cannot withdraw. So, you can withdraw up to 25% of your contribution in case you need a requirement like children's education, buying a house, a new venture. So, there are some criteria that need to be followed when you can take that money out.And how many times can you do it?Kurian Jose: You can do it thrice in your entire investment duration and every time, it has to be 25%. of your corpus. This does not include appreciation, this does not include your employer contribution.This begins after the third year of investment, right? You cannot just do it immediately.Kurian Jose: Yes, that is correct. So, money has to stay. Since you are getting advantage of tax when you invest. So, this is an EEE product, so you get tax exemption when you invest, tax exemption while you are there, and when you withdraw the money 60% of the money is tax-free for you and even when you buy the annuity, there is no GST, there is no tax payable for that. Only when the pension money comes from the annuity, you have to pay tax, but that is the tax regime you are in at that time. So, it could be 60-70. You may have no other income and this is the only income, so your tax bracket would be that much less.You get a tax benefit only if you are an old tax regime taxpayer?Kurian Jose: There are two ways to look at it. In the old regime, you get all the benefits of 80C, 80CCD(1B) and 80CCD(2). But in the new regime, you do not get the first two. You get the benefit of 80CCD(2), which is the corporate deduction. So, if you are doing corporate deduction, you get benefits in the new tax regime as well. So, a lot of people think that it does not make sense to do NPS if you are in the new tax regime and a lot of people switch. People in the 7 to 10 lakh bracket, they say, I do not need these exemptions, I want to have more cash in hand, but this is a way that you can use 80CCD(2) benefit from income tax for the new tax regime as well.Could you also give us a bird eye view on the entire inflow in terms of schemes, that is the numbers that we are talking about?Kurian Jose: There are two aspects of NPS. It was originally created for the government sector because when this started in 2004, it was called a defined benefit plan. Defined benefit means once you retire, for the rest of your life, you would get 50% of that money till you pass away. Now, that means that you are creating a big liability because longevity has increased and males live up to 77-78 and women up to 80 years. So in 20 to 30 years, people could live up to 100. So, 30 to 40 years of money had to be footed by the government and that would only be possible if you borrow and that is increasing the government liability. So, defined benefit was changed to defined contribution where you would contribute the money, you would contribute along with the government on your behalf and that whatever you grow and that amount can potentially be higher than the 50% as well. It is just that from 2004, you have not reached a stage where these people are retired yet, so this is a wonderful scheme. It is just that people do not really know about it so much. So, 85% of the corpus of NPS is with the government sector and 15% of the corpus is with the private sector where you have about 10 fund managers in space. So, from a growth perspective, if you look at the space, from an AUM perspective, there has been almost 30% growth in the industry. From the corporate sector itself, the growth has been about 35%. The all-citizen model, the growth has been about 24% and that growth has significantly come in Jan, Feb, March because of what you rightly said, the tax season. So, if you look at the flow, a large portion of the flow, almost 35% comes into equity. About 40% comes into the G-Sec category because you are also entering into a stage where you are expecting rates to come off. So, you benefit maximum from the G-Sec. The corporate bond has been about 20-25%, so that has been the rate of flow.Talking about the fund managers, I think there was a change over there also.Kurian Jose: Yes. So, there are two aspects again. You can change a fund manager once a year without any tax incident. So, you can change asset classes four times a year and fund managers once a year. What was introduced recently is that you can now have three fund managers at any particular point of time. So, there are four asset classes, which is equity, corporate bond, G-Sec and alternate assets. Between these four, you can now select one fund manager for equity, one fund manager for corporate bond, one fund manager for G-Sec and the fourth one for alternate assets. You have to select one of these.So that is also a recent addition because PFRDA may have looked at it in the mutual fund space, which comes closest, you have multiple fund managers managing multiple asset classes. I think they have given that choice to subscribers that you may like to invest with Tata Pension Fund for equity, maybe some other pension fund for G-Sec and a third fund manager for gilt so that is a new introduction that has come up recently. Maybe it is not as popularised yet.How has the return been so far across schemes?Kurian Jose: The returns have been stupendous. I was looking at the last 10-year returns, equity has given 15% kind of return, G-Sec has given 11% return and corporate bond has given about 10%, this is the best return and plus-minus 1% is the return. If you look at the one year category, equity has given up to 37% and we are happy to know that we are the best fund manager currently in the equity space. The G-Sec has given about 11% here and corporate bonds have given 9. So, G-Sec and corporate bonds have given 9-10% returns. These returns are obviously because rates have come off and you got mark to market gains. Corporate equity anything between 15% to 18% to 37% currently, obviously this may not be sustainable but that has been the range in the last 1 to 10 years.Where do you think a push is needed for this particular product in the market?Kurian Jose: The awareness is the biggest one. What generally tends to happen is most advisors are not talking about it because a), remuneration is less. b), There is always this inertia and people feel they need more cash in hand and I already have PF deductions. The products that I go to are people my parents knew about. The kind of assured returns like the FDs or the LIC, those are things which have been there and people have talked about it. This is one of India's best kept secrets because people do not really talk about it because there is no money in this whole game. But the way I look at it is this is India's answer to social security. We have no other product available and this is the only product where when cash flow stops at 60, that kind of helps build up equity that you have a secondary income because most people need the secondary income when your primary income stops. This shows that you need to give some self-love to yourself that you need to take care of yourself as well as your family. But if you are not able to take care of yourself, how can you take care of your family? That is why NPS is extremely important and should be part of everybody's asset allocation compulsorily. You get a tax advantage plus a very low-cost product. It is regulated by the Government of India. There is participation of government sector employees as well as private sector employees. It is a complete win-win for everybody in it. There is no reason why anybody should not be investing into NPS.

Bond fund managers have so much cash they’re turning to the derivatives market to put it to work, pushing down the cost of protection against defaults close to levels that prevailed when central banks were just starting to raise interest rates.The bets on tightening credit-default swap spreads are the latest sign of the overarching optimism that’s enveloped markets, where credit investors flush with cash have been buying up large amounts of new debt and pushing back the so-called maturity wall that was a major source of concern just six months ago. Money managers are using credit derivatives indexes like the Markit CDX North American Investment Grade Index to gain the exposure they want.“CDX is a liquid way to get credit risk when cash bonds are harder to find,” said Scott Kimball, chief investment officer at Loop Capital Asset Management. “A significant amount of the recent tightening is institutions looking to put more money to work than there are bonds available.”A “roll” of credit default swap contracts at the end of March should be a short-term boost for the credit derivatives index market and lead to outperformance, according to Fraser Lundie, head of fixed income at Federated Hermes. The roll, a release of new indexes tracking a refreshed basket of companies, effectively resets the maturity for so-called on-the-run contracts every six months and typically leads to an increase in the volume of trades.“On the long side, it’s an opportunity to extend by six months and pick up extra spread,” Lundie said. “On the short side, the opposite is true and this extra cost may psychologically weigh on some investors, reconsidering the rationale to continue holding the negative view or adjusting its size.” 108557690Mohammed Kazmi is among the investors using the synthetic indexes to express his bullish view on the junk bond market. Instead of buying individual bonds, the portfolio manager and chief strategist at Union Bancaire Privee uses contracts on the likes of CDX.HY and iTraxx Crossover indexes.“We like them because of their liquidity but also from a valuation perspective. You’re currently paid to be in CDS versus cash,” he said in an interview, referring to the relatively wide level of the derivatives’ spreads compared with that of an equivalent cash bond.CDS indexes are the most liquid instruments in the entire credit market, with hundreds of billions of dollars worth of contracts changing hands every month. Wagers on tighter spreads for high-grade contracts have sent the CDX IG and iTraxx Europe indexes to almost the lowest levels since the global financial crisis.“If you’re a fund manager and you said, ‘I thought there was going to be a recession, now it doesn’t appear there’s going to be’, you’re just a forced buyer. Maybe it’s CDX, maybe it’s individual companies,” Jeffrey Klingelhofer, co-head of investments at Thornburg Investment Management, said of the market. “You feel like you can’t miss out on it any more.” Thornburg doesn’t currently trade CDX. 108557696To be sure, the broader tightening masks some fragmentation in parts of the market. Euro-denominated bonds issued from firms rated CCC and below, which are at high risk of going bust, have missed out on the general rally. In addition, an S&P Global Ratings worldwide tracker of corporate failures in 2024 reached the highest year-to-date level since 2009, the ratings company said in a recent release.Bank of America Corp. strategists Ioannis Angelakis and Barnaby Martin this week recommended using the CDS options “as a way to insulate from the notable market euphoria,” especially in high-grade credit.Still, calls for wider default swap spreads in recent weeks have proven misplaced as credit kept rallying regardless. And with traders having already moderated their expectations of rate cuts this year, there is no obvious bogeyman left.“The question for me is how much widening can you get while waiting to be invested?” Kazmi said. “What are the triggers for very large widening? I don’t see them on the horizon.”What to WatchAbout $25 billion to $30 billion of US high-grade bond sales are expected next week, with the bulk likely coming Monday and Tuesday ahead of the results of the Federal Reserve’s meeting.In Europe, 64% of professionals surveyed expect over €30 billion ($32.7 billion) of sales in the coming week.In the US, the Fed meeting on March 19-20 will bring an updated dot plot and guidance from Chair Jerome Powell on rate cut timing.The UK will release its February CPI data on March 20. The Bank of England is expected to hold rates at its March 21 meeting.In China, headline activity data due March 18 is likely to show a slowdown, but the reality is closer to stabilization. Chinese banks will likely leave loan prime rates unchanged at the March 20 fixing.For an in-depth look at the data and events around the world that could impact markets in the coming week, see the Global Economy Week Ahead from Bloomberg Economics.Week in Review Less than a year ago, investors were gaming out what would happen when billions of dollars of bonds reached maturity dates, leaving borrowers potentially crushed by costly refinancings. Now, those fears are fizzling away, with companies rushing to sell debt to a buoyant market.Low prices. Risky underwriting. Traditional lenders are trying everything to win M&A funding deals. And now they’re being asked to provide delayed draw term loans — previously a hallmark of private credit deals.Buyout firm H.I.G. Capital is seeking $655 million of debt financing to help fund its potential purchase of mechanical and industrial cleaning company USA DeBusk.New York Community Bancorp said it will book a gain after selling a portfolio of consumer loans with a net book value of $899 million as well as a co-op loan.Morgan Stanley has tightened its spread targets for US corporate debt on stronger than expected economic growth and technicals, and sees demand continuing.Cash-strapped developer China Vanke Co. has been fighting to avoid its first-ever default, and while investors’ fears of an imminent meltdown appear to be easing, its long-term prospects are less clear.Banks may have less incentive to use synthetic risk transfers to manage their capital requirements as the US plans to change its proposed Basel III Endgame rules, and potentially completely remake them.A $164 million holdback on a commercial mortgage-backed securities deal has drawn attention on Wall Street as a potential new X-factor risk in the $1 trillion market.Banks led by Morgan Stanley are preparing to begin marketing $2.1 billion of senior secured notes to support the buyout of Truist Financial Corp.’s insurance business.Potential bidders for Sanofi’s consumer health division are mulling debt packages of about €7.5 billion ($8.16 billion), which would make it one of the biggest leveraged buyout financings in recent years.Enviva Inc., the world’s biggest supplier of wood pellets for generating electricity, filed for bankruptcy in Virginia, outlining a restructuring plan to cut debt by about $1 billion.Discount retailer 99 Cents Only Store LLC is exploring a debt restructuring, and some bondholders have hired advisory firm Portage Point Partners for talks.

Financial success is not a hard science. It’s a soft skill, where how you behave is more important than what you know. While everybody is looking at the same stock prices, same charts and has access to the same balance sheets and management commentary, not everybody has the same outcome in their trading and investing journey. This boils down to the single most important factor responsible for all the outcomes – our psychology and the subsequent behaviour that is driven by this.Most often than not this happens due to our existing beliefs and blind spots which most of us don’t even know that they exist. Below are a couple few psychological/sentiment indicators that can help you decode various phases of the market:VIX: this index generates a projection of volatility, which can show the speed and range of changing prices over a period. Investors may use the VIX to gauge market sentiment, specifically how fearful market participants feel.Put-call Ratio: This ratio analyses the volume/oi of puts, or rights to sell an asset, and calls, the rights to buy an asset, over a period. Investors use this ratio to gauge the overall sentiment of the market because it can imply a possible reversal in market trend. Fear & Greed Index: The fear and greed index is a market sentiment indicator that measures the emotions and psychology of investors in the stock market. It provides an overview of the market of whether market participants are primarily driven by fear or greed at a given time.Markets may be a voting machine in the short run but they do provide a prism to make us believe what the “group” thinks and this can lead to a variety of biases like “an illusion of being indestructible”, “collective rationalisation” or simply “being blinded to pitfalls”. According to behavioural finance theory, there are several types of cognitive biases that can affect an investor’s judgment. Being aware of the most common ones can help you avoid them in order to make more rational decisions after all, It’s not what you do in the markets that matters, but it is what you “don’t do” that counts!OverconfidenceMost people tend to overestimate their abilities in many areas. When you overestimate how much you know about the market or a specific stock, you’ll be tempted to make risky decisions like trying to time the market, which is trying to predict the best time to buy or sell stocks, or overinvesting in high-risk stocks, which are more likely to lose money.Herd MentalityHumans are social animals, so going along with the crowd is in our nature. From the hot new fashion trend everyone is wearing to the crowded restaurant that requires you to make reservations months in advance, people tend to make choices based on what others are doing. In financial markets, however, herd mentality can lead to asset bubbles, which is when the price of an asset like a stock rises rapidly but will eventually fall, and market crashes, which occur when a lot of investors sell off their stock.Loss AversionPeople feel the pain of a loss more acutely than the euphoria of a win, even if they win more than they lose. In financial terms, investors will often hold onto stocks they should sell to avoid realizing a loss. Conversely, they may sell too early to avoid further losses, when waiting for a market rebound would be the better option. Often investors with a strong loss aversion bias have portfolios that are too conservative, underperforming market norms.ConfirmationConfirmation bias explains how two people with opposing viewpoints can hear the same information, and each comes away believing it supports their opinion. When you have a firmly-held belief, you give heavier weight to evidence supporting your belief while minimizing evidence contradicting it. In finance, confirmation bias can lead you to overlook investment strategies or assets that fall outside of your bubble, causing you to miss significant growth opportunities. You may also invest too heavily in one area because you haven’t fully analysed the risks.Behavioural InvestingWhile biases are a critical component in behavioural finance, there are other key elements in the theory, as well.HeuristicsHeuristics is the process of simplifying a problem when you don’t have enough information to make a “perfect” decision. In these instances, you’re likely to use a shortcut or rule-of-thumb to make a decision that feels right. Heuristics simplify the decision-making process, which means they simplify the financial decision making process, as well. Without them, you'd have to spend much more time making decisions. However, relying on heuristics without carefully analysing investment options can lead to irrational or incorrect decisions.Mental AccountingIn mental accounting, you place different values on money based on how you obtained it. If you buy a winning lottery ticket, for instance, you might blow it all on a spontaneous shopping spree even though you carefully budget your paycheck. This can lead to irrational financial decisions.AnchoringAnchoring is a type of heuristics that involves subconsciously using irrelevant information as a reference point. Historical values are common anchors. For example, if you bought a stock for Rs. 100 but it starts losing its value, you may be tempted to hold onto it because you don’t want to sell it for less. Salespeople take advantage of anchoring by starting negotiations at far above market value. The inflated price serves as an anchor, so when they come down, it’ll seem like a good deal.Successful Trading and Investing requires a lot more than having the right process and discipline. In the long run, the hardest financial skill is getting the goalpost to stop moving.

Icelandic police declared a state of emergency late Saturday as lava spewed from a new volcanic fissure on the Reykjanes peninsula, the fourth eruption to hit the area since December.A "volcanic eruption has started between stora Skogfell and Hagafell on the Reykjanes Peninsula," said a statement from the Icelandic Met Office (IMO). Live video images showed glowing lava and billowing smoke.Iceland's Department of Civil Protection and Emergency Management announced it had sent a helicopter to narrow down the exact location of the new fissure. The authority also said the police had declared a state of emergency due to the eruption.According to the IMO, it occurred close to the same location as a previous eruption on February 8. Lava appeared to flow south towards the dykes built to protect the fishing village Grindavik, it said.Lava was also flowing west, as it had on February 8, and the length of the fissure was estimated to be 2.9 kilometres (1.8 miles), said the IMO.Minutes before the eruption, the agency had issued a statement saying that seismic activity indicated that there was an increased chance of an eruption.On Friday, the IMO said that magma was accumulating under the ground in the area "which could end with a new magma intrusion and possibly an eruption". That could happen "with very little warning", it said.Local media reported that Iceland's famed Blue Lagoon geothermal spa had been evacuated as well as Grindavik.- New era -The roughly 4,000 residents of Grindavik were only cleared to return to their homes on February 19 after having been evacuated on November 11, though only around a hundred chose to do so.On that occasion, hundreds of tremors damaged buildings and opened up huge cracks in roads.The quakes were followed by a volcanic fissure on December 18 that spared the village. But a fissure opened right on the town's edge, in January, sending lava flowing into the streets and reducing three homes to ashes, followed by a third eruption near the village on February 8.As of Friday, more than 300 of Grindavik's inhabitants had put in requests to sell their house to the state.The eruptions on the Reykjanes peninsula have also raised fears for the Svartsengi power plant, which supplies electricity and water to around 30,000 people on the Reykjanes peninsula.The plant was evacuated and has been run remotely since the first eruption in the region, and dykes have been built to protect it. Iceland is home to 33 active volcano systems, the highest number in Europe.It straddles the Mid-Atlantic Ridge, a crack in the ocean floor separating the Eurasian and North American tectonic plates.But until March 2021, the Reykjanes peninsula had not experienced an eruption for eight centuries.Further eruptions occurred in August 2022 and in July and December 2023, leading volcanologists to say it was probably the start of a new era of seismic activity in the region.

Advance tax payments have bolstered net direct tax collections, which may now surpass the upwardly revised target of Rs 19.45 lakh crore by the end of this fiscal, people aware of the matter told ET.Net direct tax collections from April 1, 2023, to March 15, 2024, stood at Rs 18.95 lakh crore, up 14.05% year on year, buoyed by advance tax collections of Rs 9.10 lakh crore, officials said.So far, corporates have paid Rs 6.72 lakh crore in advance tax while individuals accounted for Rs 2.37 lakh crore.“Advance tax collection increases are a direct affirmation that corporate profits and individual income is growing,” said Rohinton Sidhwa, partner at Deloitte India. With payments expected to flow in until the month end, direct tax collections could cross the revised estimate, said one of the officials cited above. 108552520Finance minister Nirmala Sitharaman, during her budget speech on February 1, had raised the direct tax collections projection for FY24 to Rs 19.45 lakh crore for the current fiscal from the budget estimate of Rs 18.20 lakh crore.Gross direct tax collections before refunds stood at `22.25 lakh crore as of March 15, up 13.5% compared to the same period last year, a second official said.The gross corporate tax collection for the period under review stood at Rs 10.97 lakh crore, rising 9.26% on year, while personal income tax, including security transaction tax (STT), stood at Rs 10.80 lakh crore, up 13.4%.Among minor head-wise collections, tax deducted at source stood at Rs 10.31 lakh crore as of March 15, self-assessment tax at Rs 1.73 lakh crore, regular assessment tax at Rs 73,528 crore, and security transaction tax at Rs 33,134 crore, the first official cited above said.The government issued record refunds of Rs 3.33 lakh crore till March 15, over 10% higher than of Rs 3.03 lakh crore issued in the corresponding period of FY23.With the government expecting revised returns by March 31, the overall direct tax collections may go up further, experts said.“It is likely that this year the revised estimates for collection of tax will be exceeded,” Sidhwa said.