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14 Jul 2012 01:00 PM
PFRDA relaxes norms to attract wider participation from fund managers  
Cafemutual team
 

New criteria aim to create a more economically viable model

The Pension Fund Regulatory and Development Authority (PFRDA) on Thursday issued new set of guidelines to boost the National Pension System (NPS).  The new eligibility criteria recommended by G N Bajpai Committee are:

a)     There will be no bidding process for appointment of fund managers. There will not be any cap to number of pension fund managers (PFMs) managing the retirement corpus under non-government and private sector segment.

b)     Any eligible company can undertake the business of fund management under the NPS.

c)     PFMs have been given the freedom to fix their own fees subject to an overall ceiling laid down by PFRDA. Earlier, the fund managers charged a uniform fee.

d)    Fund managers are also free to set up their own marketing and distribution channel in order to attract potential subscribers.

 

NPS was initiated by the government for public on May 1, 2009. But it failed to attract popularity among the citizens. Currently, it has 50,000 individuals (other than the central government employees for whom it is now mandatory) from over a 400 million workforce. PFRDA had set up the Bajpai committee in August 2010 to do an in-depth study on the drawbacks of the scheme and recommend measures to fast-track and popularise the retirement scheme for individuals, including those in the informal sector under NPS.

"It is expected that the new criteria would provide for an economically viable business model for the PFMs attracting a fresh set of entrants into the pension industry," said the press release issued by PFRDA.

The finance ministry expects an increase in subscribers after these new changes in regulations.

 
 
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