The Pension Fund Regulatory and Development Authority (PFRDA) is reviewing distributor incentives for the National Pension System (NPS). Being a low-cost product, the distribution charges given to PoPs (points of presence) are also among the lowest. PoP are entities such as banks that distribute NPS and earn a commission on it. Currently, PoPs charge Rs125 as the one-time initial subscriber registration charge. Subsequently, transaction charge is 0.25% of the amount received from the NPS subscriber, subject to a minimum of Rs20 and maximum of Rs25,000. Non-financial transaction charge is Rs20 per transaction. However, the incentive structure is under review. “We discussed it in the last board meeting and we will soon take a call on this,” said Hemant G. Contractor, chairman, PFRDA. While Contractor didn’t disclose the quantum of hike, according to him POPs need to be remunerated appropriately. “We definitely don’t want to be anywhere near the levels of insurance or mutual funds, but we need to recognise the role that distributors play in explaining and helping individuals open up to NPS,” added Contractor.
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