Tag: Supratim Bandyopadhyay

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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Improved revenue structure for NPS’ Point of Presence coming soon, says PFRDA Chief Bandyopadhyay

Banking & Finance

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Pension regulator PFRDA (Pension Fund Regulatory and Development Authority) is currently undertaking a comprehensive review of Point-of-Presence (PoP) revenue structures and new rates are expected to be available in a month, its Chairman, Supratim Bandyopadhyay, said on Friday.

“We have formed a committee for this purpose. The report is expected in a month,” Bandyopadhyay told a press conference on the occasion of ‘NPS Diwas’.

From this year, October 1 will be celebrated as ‘NPS Diwas’ every year, he added.

Also see: Fund Query: Should investors over 60 go for the NPS?

PoPs are the first points of interaction of the National Pension System (NPS) subscriber with the architecture. These entities provide services related to NPS to contributors. Such entities include banks, non-banks and various fintech companies.

The proposed move to revise PoP compensation structure is expected to motivate them to sell more NPS to citizens across the country. It will come at a time when several PoPs have conveyed to PFRDA that the individual agents or business correspondents (in the case of banks) appointed by them will also start distributing NPS as a product.

Individual distributors

PFRDA has already, in June this year, made changes in regulations to allow even individuals to work as distributors of pension products. This has paved the way for those working as insurance agents or mutual fund distributors to also distribute NPS.

Earlier, only institutions were given the licences for distribution, and the regulator had allowed entities such as banks, NBFCs and certain non-bank entities categorised as PoP to work as distributors.

Strong growth

Meanwhile, Bandyopadhyay also said that the number of new NPS subscribers onboarded in the first half of this fiscal grew 60 per cent at about 3.25 lakhs against 2.1 lakh recorded in the same period last year. As of September 25, the total assets under management (AUM) of NPS stood at about ₹6.67 lakh crore, he said, adding that PFRDA was well on course of meeting the aspiration of ₹7.5 lakh crore AUM by the end of March 2022.

Also see: Custodians for NPS: PFRDA sets minimum ₹1-lakh crore assets under custody for eligibility

Bandyopadhyay also highlighted that the equity funds of NPS have recorded 13 per cent compounded annual growth rate (CAGR) on a 12-year track record.

“Active fund management has been a huge positive for us. It was our decision to allow active fund management that has helped us achieve this. This would not have been possible in passive fund management,” he said.

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Pension funds: PFRDA revises sponsor’s capital requirement criteria

Banking & Finance

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Pension fund regulator PFRDA is keen that sponsors and pension funds set up by them are strong enough to ride the current growth wave in the pension sector. Towards this end, it has tweaked the capital requirement norms for sponsors of Pension Funds, stipulating higher paid-up capital and networth for those looking to set up such funds.

A sponsor – individually or jointly– of a pension fund should have atleast ₹25 crore in paid-up capital on the date of making application as a sponsor and positive tangible networth of at least ₹ 50 crore on the last date of each of the preceding five financial years, the PFRDA has now ruled.

“The way we see growth in pension sector in last few years, we believe that in days to come it will grow even further. We felt the sponsors should be adequately capitalised and then only the pension funds they set up can perform well. This has prompted us to bring this change as earlier they could apply with networth of ₹25 crore,” Supratim Bandyopadhyay, Chairman, Pension Fund Regulatory and Development Authority (PFRDA), told BusinessLine.

He also said that all existing pension fund managers – eight of them – will be given six months time to conform to the new dispensation of having networth of at least ₹50 crore. Hitherto, the minimum networth requirement for them was placed at ₹25 crore, and some of them were already at levels above the ₹25 crore threshold.

Pension AUM

India’s pension assets under management (AUM), which recently crossed the ₹6-lakh crore mark, has been growing at frenetic pace of over 30 per cent. The PFRDA sees the overall AUM at this growth rate touch ₹30 lakh crore by 2030. ByMarch-end 2021, PFRDA expects pension AUM to touch ₹7.5-lakh crore.

Pension AUM cross ₹6-lakh crore: PFRDA Chief

This latest PFRDA move to enhance the capital requirement of sponsors comes at a time when the pension regulator is expected to soon open an ‘on tap’ window of 30-40 days for those looking for pension fund manager’s licences.

The on-tap window could also prompt some of the existing mutual fund players to take a serious look at the pension sector and enter this space, say market observers.

Another important reason why sponsors and pension funds need to be capitalised better is the PFRDA plan to allow pension funds offer minimum assured return scheme (MARS) products to customers. As such assured return scheme would entail risk, it is better to be well capitalised to take care of eventualities, said experts.

ThePFRDA had recently come up with a Request for Proposal for appointment of a consultant to help the regulator design the MARS.

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