Pension regulator Pension Fund Regulatory & Development Authority (PFRDA) has appointed EY Actuarial Services LLP as a consultant to help design a Minimum Assured Return Scheme (MARS) under the National Pension System (NPS).

Now that a consultant has been appointed for MARS design, it may take another 6-8 months before the actual product gets rolled out to the public, sources in PFRDA said.

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.

EY Actuarial Services is expected to help formulate or design a MARS that can be offered to existing and prospective subscribers by the pension funds.

It 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.

New request for proposal 

It maybe recalled that PFRDA had come out with a new Request for Proposal (RFP) in August last year. This new RFP had relaxed the eligibility criteria set earlier for a bidder and had allowed those with experience of designing or development of atleast one scheme with guarantee for its client, to bid for the consultant role.

The eligibility criteria had to be tweaked as the response for the previous RFP— issued in May last year— was very tepid with only one entity showing interest.

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.

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 networth and paid up capital for those looking to set up pension funds in the country.

India’s pension assets under management have already crossed the ₹7-lakh crore mark and are expected to touch ₹7.5-lakh crore by end March this fiscal. PFRDA is aiming for an AUM (assets under management) of ₹30-lakh crore by 2030.

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