On 17 September 2016, the Pension Fund Regulatory and Development Authority (PFRDA) invited fresh bids for managing funds for the private sector National Pension System (NPS). But a year later, the authority is yet to finalise the bids and issue fresh licences to the pension fund managers (PFMs) of NPS. In the interim, the managers continue to operate through an extension. “The request for proposal for the PFMs was valid till July. However, the regulator sought an extension of 3 months. In the interim, the existing PFMs can continue to function under the existing dispensation,” said Kumar Sharadindu, chief executive officer and managing director, SBI Pension Funds Pvt. Ltd. “After that, it is not clear whether pension funds serving the private sector (of NPS) will be legally valid,” he added.

However, according to Hemant G. Contractor, chairman, PFRDA, the PFMs will be given further extension of a month. But why this delay? According to the Authority, the hold-up is largely because it is awaiting clarity on the foreign direct investment (FDI) norms in the pension sector from the government. “Some PFMs are promoted by life insurance companies that already have a joint venture with a foreign partner. We await clarity on whether that needs to be taken into consideration while arriving at the 49% cap on foreign direct investment or not,” said Contractor. “We are hopeful to get some clarity on this soon,” he added.

So the PFMs continue to operate at the current investment fee of 0.01%, which, according to them, is unsustainable.

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