An opportunity to manage over ₹5 lakh crore pension monies will soon be up for grabs as the pension regulator PFRDA has issued the much awaited Request for Proposal (RFP) document for selection of sponsors of pension funds for National Pension System (NPS) of government as well as private schemes besides other schemes administered by the regulator.

All the existing sponsors of seven pension fund managers would have to again go through the new process of selection, according to the RFP.

The main aim of the RFP is to select the sponsor(s) of pension funds, and register these through such sponsors for managing NPS schemes and other pension schemes regulated/administered by PFRDA.

The RFP has for the first time introduced the concept of slab structure and specified the ‘caps’ for the investment management fee that can be charged by the pension fund manager.

The investment management fee (IMF) will have to be charged as a percentage on the assets under management on a daily accrual basis and paid to the pension fund at the end of every quarter of a year.

Qualifications and criterias

The applicant/bidder can charge a lower slab wise fee within the limit mentioned in the table provided in RFP subject to a lower cap of 0.03 per cent for each slab. For AUMs upto ₹ 10,000 crore, the maximum IMF to be charged will be 0.09 per cent. For AUMs between ₹10,001-₹50,000 crore, the maximum is 0.06 per cent. In the case of AUMs between ₹ 50,000-₹1,50,000 crore, it is 0.05 per cent and for AUMs above ₹ 1,50,000 crore, it is 0.03 per cent.

One of the pre-qualification criteria for a sponsor applicant is that the monthly average assets under management of sponsors must not be less than ₹50,000 crore for the last 12 months ending the preceding month of application.

Also, besides having atleast five years experience of fund management, the sponsor should have profits-after-tax in at least three of the preceding five financial years 2015-16 to 2019-20. Further, there should be no cash loss in the last preceding five financial years, according to RFP.

PFRDA said that the last date for submission of proposals would be January 22 next year.

It may be recalled that PFRDA Chairman Supratim Bandyopadhyay had recently said that PFRDA will relook at the remuneration structure of pension fund managers and bring improvements to enhance the number of players in the Indian pension market.

It had set up a six member committee -- four from PFRDA, one from the mutual fund industry, and one from another regulatory body-- to review the PFMs charge structure, which is widely considered to be low going by the industry standards.

The latest RFP is one-- for managing both government and private sector NPS schemes. This is being done because from April 1,2019, central government employees can choose other private sector fund managers also, apart from the default ones.

PFRDA does not propose to this time round, insist on other bidders to match the fee proposed by the bidder who has quoted the least.

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