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Pension regulator PFRDA's board will meet on December 23 to take a final call on awarding licences to new pension fund managers (PFMs), who will for the first time operate under a “differential pricing” model for managing the private sector schemes of National Pension System (NPS), a top official said.
"The board will meet on December 23. The board will decide on who will get the new licences," Hemant Contractor, Chairman, PFRDA, said on Monday.
Asked if all the nine entities that had responded to PFRDA's request for proposal would get the licences, Contractor said it was for the board to decide on this matter.
Allowing differential pricing is expected to open a new area of competition, bring in competition among PFMs in terms of fee structure and servicing standards.
These nine bidders (three public sector and six from private sector) have bid for a management fee that ranged from 0.07 per cent to 0.1 per cent, Contractor confirmed.
In the RFP, the pension regulator had capped the investment management fee at 0.1 per cent per annum (10 basis points).
The new PFMs — who will operate under differential pricing model — will have to again register with the PFRDA. They have to fulfil a minimum net worth of ₹50 crore for both the sponsor and the Pension Fund. Also, this time round, it has been specified that a PFM can be appointed for a maximum period of five years. No specific time period was earlier mentioned.
This is also the first time that Pension Fund Regulatory & Development Authority (PFRDA) has invited bids for appointment of PFMs, post its statutory recognition (PFRDA Act 2013) and the framing of Pension Fund Regulations in 2015.
Ushering in “differential pricing” is expected to make the pension sector more “market driven” and ensure that NPS subscribers can make an informed choice.
Currently, private sector schemes — with assets under management (AUM) of about ₹15,000 crore — are being managed by eight professional pension funds, including three from the public sector.
The investment management fee is currently pegged at 0.01 per cent (one basis point).
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