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Pension regulator Pension Fund Regulatory & Development Authority (PFRDA) has come up with a new Request for Proposal (RFP) for appointment of a consultant to help design a Minimum Assured Return Scheme (MARS) under the National Pension System (NPS).
The new RFP has relaxed the eligibility criteria set earlier for a bidder and has now allowed those with experience of designing or development of atleast one scheme with guarantee for its client, to bid for the consultant role, sources close to the development said.
Former RFP
The eligibility criteria had to be tweaked as the response for the previous RFP— issued in May this year— was very tepid with only one entity showing interest, they added.
The earlier RFP mandated that a bidder, which has to be a corporate entity registered in India, should have experience of designing or development of schemes of guarantee with atleast three schemes being in operation or running in India, after being offered by its clients to the public at large. This RFP was cancelled on July 22.
MARS
The whole idea behind having MARS is to have a separate scheme that can offer a guaranteed minimum rate of return to NPS subscribers, especially those who are risk averse. Currently, the NPS gives returns annually, based on prevailing market conditions.
The appointed consultant, with requisite actuarial skills, is expected to help formulate or design a MARS that can be offered to existing and prospective subscribers by the pension funds.
The chosen consultant is also expected to set up a procedure to evaluate and approve basic scheme design modifications by the pension funds and supervise MARS. The consultant would be required to prescribe fees, solvency requirements, risk management and reporting mechanisms for pension funds in respect of MARS.
Pension funds
To enable pension funds and its sponsors to offer MARS like products, PFRDA has already tweaked the capital requirement norms for the sponsors and stipulated higher net worth and paid up capital for those looking to set up pension funds in the country. As such products carry risk, it is better to be well capitalised to take care of eventualities, experts said.
India’s pension assets under management have already crossed the ₹6 lakh crore mark and are expected to touch ₹7.5 lakh crore by end March this fiscal. PFRDA is aiming for AUM of ₹30 lakh crore by the year 2030.
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