Soon, National Pension System (NPS) subscribers could have a longer list of fund managers to choose from for managing their voluntary retirement contributions.

“We will be coming out with our RFP (request for proposal) in another 2-2.5 months. So, by December, the RFP should be out. Everyone is welcome to come and manage it. It will not be restrictive (in terms of numbers), but there will be entry barriers to ensure only serious players come in,” said Supratim Bandyopadhyay, Chairman, Pension Fund Regulatory and Development Authority of India (PFRDA), at the CII Insurance and Pensions Summit on Friday.

On-boarding more fund managers

At present, the NPS corpus is managed by seven pension fund managers – SBI Pension, UTI Retirement Solutions, LIC Pension, ICICI Prudential, HDFC Pension, Birla Sun Life Pension Scheme and Kotak Pension Fund.

Earlier, in an interview to Moneycontrol, Bandyopadhyay had said that the PFRDA was looking to increase the number of fund managers as also the expense ratio. At 0.01 per cent, it is amongst the lowest in the world. He reiterated the PFRDA’s intention of looking at changes in the pension fund management cost structure.

He also pointed to lower annuity rates offered by life insurers empanelled with the NPS Trust. Subscribers have to compulsorily use 40 per cent of their NPS corpus at maturity to buy annuities from these seven life insurers. “Some annuity service providers (designated life insurers) provide returns of less than six per cent. We have received queries from subscribers saying that while their pension funds generate higher returns during the investment phase, they get locked into lower rates at annuitisation,” he said.

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