Tag: Pension Fund Regulatory and Development Authority

Nation Pension System AUM likely to rise 30% to Rs 7.5 lakh crore by FY22, says PFRDA chairman, BFSI News, ET BFSI

Personal Finance

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Pension Fund Regulatory and Development Authority (PFRDA) Chairman Supratim Bandyopadhyay on Friday said that the corporate sector is showing greater interest in the National Pension System (NPS), which may lead to an on-year 30% rise in assets under management (AUM) on year to Rs 7.5 lakh crore by FY22.

Other key takeaways from the speech

  • Total NPS corpus was at Rs 6.67 lakh crore as on September 25, 2021, up from Rs 5.78 lakh crore as on March 31.
  • Private individual enrolments (excluding Atal Pension Yojana) grew 35% on year to 18.28 lakh as on September 25, 2021, while corporate sector subscribers have shown 20% growth to 12.59 lakh during the period.
  • The Central government employee subscribers grew 4.4% on year to 22.24 lakh as on September 25, 2021, while state governments subscribers grew 10% to 53.79 lakh during the period.

Addition of new fund managers

PFRDA has recently given approval to two new entrants – Tata Asset Management and Max Life Insurance – into fund management of NPS. Axis Mutual Fund is also in the process of joining as a fund manager, Bandyopadhyay said.

Currently, there are seven fund managers – HDFC Pension Management, ICICI Prudential Pension Funds Management Company, Kotak Mahindra Pension Fund, LIC Pension Fund, SBI Pension Funds, UTI Retirement Solutions and Aditya Birla Sun Life Pension Management.

Individual Subscribers

In June, PFRDA permitted the engagement of individuals who are working as business correspondents or agents within their existing business structure for facilitating the distribution of pension schemes.

Bandyopadhyay said individual distributors would play a key role in the expansion of NPS among the masses. The regulator is also examining if the fees paid to distributors could be enhanced from the current rate of 0.25% of the contribution by a subscriber.

With longevity of life and working life going well beyond 60 years, the regulator has enhanced the entry age for NPS to 70 from 65 and exit age from 70 to 75 years, in all citizen and corporate schemes.



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PSBs may have to provide for over Rs 21,000 crore annually for family pension revision, BFSI News, ET BFSI

Banking & Finance

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Public sector banks will have to make an additional provision of over Rs 21,300 crore annually on account of a hike in family pension and higher contribution toward the National Pension System (NPS), according to a report.

A special dispensation will be sought from the Reserve Bank of India (RBI) to allow provisions over the next five years, it said.

The plan

Acknowledging that family pension for bank employees is at a paltry level, the government this week had announced that it would raise the same to 30% of the last drawn salary.

Earlier, kin of a deceased PSB employee used to get a maximum of Rs 9,284 per month as a family pension, said Department of Financial Services Secretary Debasish Panda.

“The cap has been completely removed and a uniform slab of 30% at the last-drawn salary will be entitled as family pension,” Panda told reporters here, admitting that the earlier levels were “paltry”.

NPS hike

Similarly, the ministry has also decided to increase the employer’s contribution to the New Pension Scheme (NPS) to 14% of the salary from the current 10%, he said.

Finance Minister Nirmala Sitharaman expressed her satisfaction at public sector banks’ performance in the past few years and appreciated that many of them have come out of the RBI’s prompt corrective action framework.

Panda said a dozen PSBs have become leaner and started delivering profits which have upped the investor confidence in them and made them self-dependent for capital raising.

He said that since last year, the banks have collectively raised over Rs 69,000 crore, including Rs 10,000 crore in equity, and are in the process of raising another Rs 12,000 crore at present.

As on March 31, the total number of pensioners stood at around 5.66 lakh and family pensioners at over 1.55 lakh.



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Pension AUM cross ₹6-lakh crore: PFRDA Chief

Banking & Finance

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The pension Assets Under Management (AUM) have reached a new milestone and crossed the ₹6-lakh crore mark two days back, Pension Fund Regulatory and Development Authority (PFRDA) Chairman, Supratim Bandyopadhyay, has said. It has just taken seven months for addition of ₹1-lakh crore in AUM, which crossed the ₹5-lakh crore mark in October 2020.

“We had initially thought this ₹6-lakh crore AUM would be achieved by end March 2021. But we had missed it out due to market conditions. However, within one-and-half months we have now reached the ₹6-lakh crore level,” Bandyopadhyay told BusinessLine.

It maybe recalled that the pension AUM, as of end March 2021, stood at ₹5.78-lakh crore (₹4.17-lakh crore as of end March 2020).

Bandyopadhyay said that the PFRDA was now looking at an AUM target of ₹7.5-lakh crore by the end March 2022. “I am happy that whatever projections we had made two years back.. we are on track. At this rate, I believe we are on path to reach the projected level of ₹30-lakh crore by the year 2030,” he added.

Variable annuities

Bandyopadhyay said that work is on towards amendments to the PFRDA Act and once this gets Parliament nod, then pension fund managers and even the PFRDA will be in a position to roll out other payout products (such as systematic withdrawal plan) that will be distinct from annuities.

He highlighted that annuity rates in the market have fallen and many retirees are unhappy about the current level of returns.

The need for variable annuities – where the returns vary according to the market related benchmark – has all the more increased, given that annuity rates have fallen in line with sharp fall in interest rates in the system.

Meanwhile, the PFRDA Board has given approval for National Pension System (NPS) subscribers with corpus up to ₹5 lakh to withdraw their accumulations on retirement funds without mandating their investment in annuities. “This decision is expected to be shortly notified. We are also alerted our CRAs to be ready with the changes,” Bandyopadhyay said.

The pension regulator’s Board has also approved extension to the maximum entry age for availing the NPS benefits to 70 years from the current 65 years. Simultaneously, the exit age limit is also being extended from 70 years to 75 years. “This decision will be notified soon and will get implemented this year,” he added.

MARS

The PFRDA has floated a request for proposal (RFP) to appoint a consultant to design Minimum Assured Return Scheme (MARS) under the NPS.

The whole idea behind having MARS is to have a separate scheme that can offer a guaranteed minimum rate of return to NPS subscribers, especially those who are risk averse. Currently, the NPS gives returns annually, based on prevailing market conditions.

The appointed consultant, with requisite actuarial skills, is expected to help formulate/design a MARS that can be offered to the existing and prospective subscribers by pension funds.

The chosen consultant is also expected to set up a procedure to evaluate and approve basic scheme design modifications by pension funds and supervise MARS. The consultant would be required to prescribe fees, solvency requirements, risk management and reporting mechanisms for pension funds in respect of MARS, according to the RFP document.

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KVG Bank bags PFRDA awards

Banking & Finance

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Karnataka Vikas Grameen Bank (KVGB), a regional rural bank headquartered in Dharwad, has bagged five awards (Lead to Leap, APY Makers of Excellence, Game Changers, Leadership Capital and Amazing Achievers) under various campaigns held for enrolment of Atal Pension Yojana (APY) from the Pension Fund Regulatory and Development Authority (PFRDA).

Quoting P Gopi Krishna, Chairman of KVGB, a press statement said that the bank is playing a pivotal role in implementation of social security schemes such as Atal Pension Yojana (APY), Prime Minister Jeevan Jyothi Bima Yojana (PMJJBY), and Prime Minister Suraksha Bima Yojana (PMSBY).

KVG Bank inks pact with fintech platform

Financial services at affordable cost

The bank enrolled 78,129 policies under PMJJBY, 94,658 policies under PMSBY, and 68,961 accounts under APY during the financial year 2020-21.

KVGB launches loan scheme for women entrepreneurs

The bank has enrolled a cumulative of 51,41,524 policies under PMJJBY, 11,89,321 policies under PMSBY, and 2,06,214 accounts under APY since the introduction of these schemes, he said.

The bank has so far settled 3,809 claims (₹76.18 crore) under PMJJBY, and 706 claims (₹13 crore) under PMSBY.

The bank firmly believes that delivery of financial services at an affordable cost to the vast sections of disadvantaged and low-income groups is a national priority, he added.

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