The pension fund regulator, PFRDA, expects greater acceptance of the new pension system (NPS), consequent to the recent revamp of the fee structure for pension fund managers.
The Pension Fund Regulatory and Development Authority (PFRDA) has fixed the fee ceiling for fund managers at 0.25 per cent of assets under management.
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.
With a revamped fee ceiling, it is expected that fund managers would walk the extra mile in promoting NPS and enabling better accessibility for private subscribers.
NPS had been designed to harness the existing distribution channels of banking, insurance and capital markets.
But the experience so far has shown that NPS has not been able to take advantage of the existing network mainly due to differences in the compensation structure for 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 said there was a breakdown of the traditional sources of social security.
Consequently, there is need to provide a social safety net to prevent the population from falling into poverty in the old age, he said.