Regulator Plans To Hike Fee Charged By NPS Fund Managers
A committe will submit its report on a proposed fee structure for fund managers of the NPS next week.
Fund managers of the National Pension Scheme will soon be able to charge a higher fund management fee.
A committee, comprising members of the Pension Fund Regulatory & Development Authority as well as representatives of the mutual fund industry, is finalising a proposal for a new fee structure for the fund managers of the NPS, Supratim Bandyopadhyay, chairman at the regulator, said at a virtual conference on Thursday.
The committee will likely submit its report next week. It will be discussed the PFRDA’s board meeting in November, and once the proposal for the higher fee structure is cleared, “requests for proposal” will be floated and institutions can apply to be pension fund managers, said Bandyopadhyay.
Currently, the eight pension fund managers charge a flat fee of 1 basis point of assets under management. They are Aditya Birla Sun Life Pension Management Ltd., HDFC Pension Management Company Ltd., UTI Retirement Solutions Ltd., SBI Pension Funds Private Ltd., ICICI Prudential Pension Funds Management Co. Ltd., Reliance Pension Fund, Kotak Mahindra Pension Fund Ltd., and LIC Pension Fund.
The higher fee, according to Bandyopadhyay, will ensure that the managers are better able to handle infrastructure and research facilities, allowing continued performance of the NPS. And, while the fee is set to rise, it will not be as high as that charged by asset management companies for mutual fund schemes, he said.
The NPS is a government-sponsored pension scheme that was introduced in 2004 for government employees and then opened to all sectors in 2009. The scheme gained traction after the introduction of the Section 80CCD of the Income Tax Act, which allowed contributions of up to Rs 50,000 a year in the scheme to be deducted from taxable income (under the old tax regime).
The PFRDA, which governs both the NPS and the Atal Pension Yojana, saw assets under management rise 21% in the first six months of the current financial year to Rs 5.05 lakh crore, Bandyopadhyay said. During this period, enrollment into the NPS rose 14%. The PFRDA, he said, is aiming to add 7-7.5 lakh subscribers in the pension scheme in the current fiscal.