Investment pattern has to be changed to cover a wider range of financial instruments like PSUs, highly rated and bonds/debentures, units of mutual funds and diversified equity, as there is a conflict between the objectives and investment universe of pension funds in India, they said.Speaking on the occasion, UTI executive director SK Basu said, "Pension fund corpus is primarily very long-term in nature and calls for fine balancing of asset allocation."A minor adjustment in the investment pattern would help investors to achieve a higher return. Citing Professor LC Gupta's study, he said in a five year period, equity investment is capable of generating an income of 20 per cent.

Now that equity transactions have become much more simplified and the markets are much more orderly, it is far more easier to invest in equities on a much lower transaction cost, Mr Basu said. The Dave panel report has estimated that an improvement of 1 per cent rate of return has the potential to yield a 20 per cent higher corpus at the age of 60.

"If we include 20 per cent of the corpus to be invested in diversified equity based on a 20 per cent return on equity, the average gross earnings would goto approximately 12.73 per cent and net return would be to close 11.25 per cent," Mr Basu said.