The pension fund regulator PFRDA sees greater offtake of the new pension system (NPS) on the back of its move to revamp the fee structure of pension fund managers.
The Pension Fund Regulatory and Development Authority (PFRDA) has fixed a fee ceiling of 0.25 per cent for pension fund managers.
This is higher than the earlier fee level of 0.0009 per cent, which was considered inadequate and a loss-making proposition for fund managers.
NPS had been designed to harness the existing distribution channels of banking, insurance and capital markets.
But the experience so far has been that NPS has not been able to take advantage of the existing distribution network due mainly to differences in the compensation structure for the distributors.
“I agree that the NPS is not popular in the private sector, where it is voluntary. We now trust that with the revamp of the fee structure and other measures taken by us, we will see greater offtake through these channels,” Yogesh Agarwal, PFRDA Chairman, said on the sidelines of an Assocham event here.
In his keynote address at the national conference on pension funds, Agarwal highlighted that there has been a breakdown of the traditional sources of social security.
Consequently, there is a need to provide for a social safety net to prevent the population from falling into poverty in old age, he said.