Dear Comrades,
The Pension Fund Regulatory and Development
Authority (PFRDA) today issued a revised set of guidelines for registration of
Pension Fund Managers (PFMs) to manage the National Pension System (NPS) for
the non-government and private sector.
The revised guidelines, available on PFRDA’s website www.pfrda.org.in, have
done away with the earlier bidding process, wherein a pre-determined number of
slots were bid for by the PFMs, and the fees charged by them for managing the
pension funds had to be uniform for all players. The earlier process has now
been replaced by a system which lays down the eligibility criteria for
registration as PFMs, and all interested players desiring to enter the pension
industry, can register as PFMs subject to their fulfilling the eligibility
criteria. There is no limitation on the number of PFMs. Further, the PFMs are
now allowed to prescribe their own fee charges, subject to an overall ceiling
to be laid down by PFRDA. It is expected that this would provide for an
economically viable business model for the PFMs attracting a fresh set of
entrants into the pension industry, and the resultant competition would ensure
market driven fee structures, which would work to the advantage of the pension
subscribers.
The PFMs would also be expected to market the National Pension System (NPS) to
the potential subscribers, deciding their own marketing and distribution
channels as per their business perceptions.
It may be recalled that the NPS has not achieved any significant progress in
the private sector, despite passage of considerable time, and these guidelines
have been awaited by the industry for quite some time. The changes are as per
the recommendations of the Bajpai Committee, set up by PFRDA to go into the
reasons for the slow progress of NPS in the private sector. The final
guidelines have been issued subsequent to intensive discussions with all
stakeholders, including existing and potential Pension Fund Managers as also
suggestions received from pension subscribers.
