NPS subscribers will now have more choice as two new firms – DSP BlackRock and Birla Sun Life are likely to join the league.
While DSP BlackRock was managing NPS a few years back, Birla Sun Life is the new entrant in the pension fund management industry. DSP BlackRock had discontinued NPS reportedly citing the low management fee structure.
Currently, seven pension fund managers - SBI, UTI, LIC, Kotak Mahindra, Reliance Capital, ICICI Prudential and HDFC are managing NPS.
Earlier in September, PFRDA has invited bids from the pension fund managers in which the regulator has increased the fund management fee from 0.01% to 0.1% or 10 basis points. Unlike previous auctions in which all pension fund managers had to accept the lowest bid, the managers can now charge independently but it has to be within 10 basis points of AUM.
According to media reports, both DSP BlackRock and ICICI Prudential have bid to charge the highest management fee of 0.1%. On the other hand, LIC and SBI made the lowest bid of 7 basis points. Similarly, other pension fund managers who have submitted their bids are UTI Retirement (0.8%), Reliance Capital (0.0849%), Kotak Mahindra (0.0895%), HDFC Pension Management (0.099%), Birla Sun Life Pension Management at (0.099%).
PFRDA has mandated a net worth of Rs. 25 crore for the pension fund managers.
The pension fund managers manage over Rs. 1.50 lakh crore under NPS as on October 2016, most of which is accounted by the contribution from government employees.