The Hindu Business Line : Seven entities submit bids for pension fund managers' role

The LIC, SBI, UTI Asset Management, Canara Bank, State Trading Corporation, PNB and IDBI Capital are the institutions that have submitted their bids.

New Delhi May 25 Seven public sector financial institutions have evinced interest to manage the pension funds under the new pension scheme (NPS).

The institutions that have submitted their bids to the Pension Fund Regulatory and Development Authority (PFRDA) are Life Insurance Corporation, State Bank of India, UTI Asset Management, Canara Bank, State Trading Corporation of India, Punjab National Bank and IDBI Capital.

The PFRDA had called for expression of interest from public sector companies to take up the role of pension fund managers (PFMs) on May 11 this year. The interim regulator said that they plan to appoint two to three PFMs to manage the new pension funds of all Central and State Government employees (barring the armed forces) recruited after January 1, 2004.

As per estimates, about five-lakh Central and State Government employees are have joined the scheme since it came into being on January 1, 2004, leading to an accumulation of around Rs 1,700 crore pension fund corpus.

Under the NPS, employees have to contribute 10 per cent of their basic salary and dearness allowance, with a matching contribution from their employer.

This contributory system is in contrast to the earlier system, in which employees used to get defined returns.

All States except the three left-ruled - West Bengal, Tripura and Kerala - have switched over to the system. The Northeast States have also not joined in, though they are said to be willing once the PFMs are appointed and the framework is ready.

"We expect the whole process to be completed by July 20. But the first step is to see who are the eligible under the criteria that we had announced earlier. This we expect to complete by the end of the month," Ms Meena Chaturvedi, Executive Director, PFRDA, said.

Speaking about the process ahead, Ms Chaturvedi said, "The PFRDA would now issue the request for proposal (RFP) by June 11 under which eligible institutions would be required to give requisite financial and technical details. They would be given two-three weeks to submit the RFP, only after which the final selection process for the PFMs would start. The process would be completed by July 20."

The regulator had recently appointed National Securities Depository Ltd (NSDL) as the central record-keeping agency. NSDL is in the process of preparing a software, database and network connectivity to manage all funds under the NPS.

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