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Cost structure for pension fund managers of NPS likely to change soon, says PFRDA Chairman

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The cost structure for pension fund managers and intermediaries of the National Pension Scheme (NPS) is likely to change soon and the request for proposals (RFP) for pension fund managers will be out by December, according to Supratim Bandyopadhyay, chairman of the Pension Fund Regulatory and Development Authority (PFRDA).

“We are doing a cost-benefit analysis and definitely very soon we will see some changes in the cost structure for pension fund managers and other intermediaries also,” Bandyopadhyay said during a virtual conference hosted by the Confederation of Indian Industry on Friday.

While the cost of the NPS is one of the lowest in the world, it cuts both ways, he said. Subscribers to the NPS are currently charged 0.01%.

This meant low revenue streams for pension fund managers who have to account for brokerage charges, audit fees and other costs. The cost was very low and needed to be increased in order to attract talent from the market, Bandyopadhyay said in earlier reports.

Regarding the RFP, he said, “The RFP for pension fund managers may take about two and a half months. By December definitely we will see the RFPs out and everybody is welcome.”

The RFP for additional pension fund managers has been a long-standing demand of the PFRDA, with the finance ministry giving in-principle approval for the request in December last year.

At present there are eight pension fund managers under the NPS including SBI Pension Funds, UTI Retirement Solutions and LIC Pension Fund.

While there might not be any restrictions on the number of pension fund managers, there will be entry barriers to ensure a certain level of quality, Bandopadhyay said. “Hopefully we will not be restricting the numbers but there will be some entry barriers to see that only very serious players should come.”

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