The Hindu Business Line : 3 entities proposed for pension fund managers

New Delhi, June 20 The committee formed by the Pension Fund Regulatory and Development Authority (PFRDA) has recommended the names of three public sector financial institutions as managers of pension funds under the New Pension Scheme (NPS).

Based on the overall evaluation, including technical and commercial parameters, the committee has found State Bank of India, UTI Asset Management Company Private Ltd and Life Insurance Corporation of India as the three best value bidders.

The three entities will now have to set up separate companies and the whole process of managing pension funds could start in the next four to six months.

IDBI Capital Market Services Ltd was the other company that was short-listed and had given the request for proposal (RFP) after seven companies had originally evinced interest when the PFRDA had called for applications for the role of pension fund managers.

“The report of the committee is under consideration by the PFRDA. The process of contract negotiations will begin shortly and we are hoping that the negotiations would be finalised by August 31,” Ms Meena Chaturvedi, Executive Director, PFRDA, told Business Line.

She, however, refused to give specific details on the recommendations of the committee.

“Since the report was submitted only on Thursday, it is too early to comment on the contents as we are still going through the document. But the committee was entrusted with the responsibility of evaluation of the proposals received from the eligible entities and to short-list the three best value bidders in terms of requirements (technical & commercial) of RFP and we are sure they have selected the best,” she added.

Pension scheme

As per estimates, about five-lakh Central and state government employees have joined the scheme since it came into being on January 1, 2004, leading to 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.

The sponsors will have to offer alternative products to employees including risk-free options under which all funds would be invested in government securities, and share-market linked products with variable returns as well.

Meanwhile, the contract between PFRDA and National Securities Depository Limited (NSDL) is under finalisation and the work relating to CRA (central record keeping agency) activities will commence as soon as NSDL obtains the approval of SEBI to undertake this work.

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