NPS: Pension regulator grants licence to DSP Investment Managers to launch fund

K.R. Srivats | | Updated on: Jul 21, 2022

DSP Group will be the 11th Pension Fund Manager once final approvals are in place

Pension regulator PFRDA has granted a licence to DSP Investment Managers to undertake pension fund management business. This licence has been given to DSP Investment Managers as a Sponsor of a pension fund.

The Board of Pension Fund Regulatory & Development Authority (PFRDA) has given approval to DSP Investment Managers as a Sponsor, Supratim Bandyopadhyay, Chairman, PFRDA told BusinessLine.

Bandopadhyay highlighted that PFRDA these days is giving licences only to the Sponsor of a pension fund. With this move, DSP Group will be the 11th pension fund manager in the Indian pension fund management space. 

The latest licence to DSP Investment Managers is understood to have come after the applicant used the on-tap licensing window that was open between mid-April and May 17 this year for awarding licences to sponsors of pension funds. 

This is the second year in a row when PFRDA had opened such a window in a bid to enhance the number of pension fund managers in the country.

DSP not a new player

Pension management industry observers point out that DSP was not strictly a new player as the PFRDA had earlier awarded a licence to DSP Blackrock. However, with Blackrock having exited,  the DSP Group had to again make a fresh application as a Sponsor to obtain licence for undertaking pension fund management business, it is learnt.

After getting a Certificate of Registration from PFRDA, the process of creating a Pension Fund will be initiated. Thereafter the Sponsor (DSP Investment Managers) will seek Certificate of Commencement of Business.

Currently, there are seven (the pension fund management arms of SBI, UTI, LIC, ICICI, HDFC, Aditya Birla SunLife and Kotak) functioning Pension Fund Managers and three ( Axis Asset Management , Tata Asset Management and Max Life Insurance) are on the verge of commencing pension fund management business. Now, one more (DSP Investment Managers) will be added.

On tap window

It maybe recalled that PFRDA had last year opened an “on tap” window from July 1-31 for awarding licences to sponsors of pension funds. After this, there were some players who had approached PFRDA evincing interest to become pension fund managers, it is learnt.

There were two applications — Tata Asset Management Company and Max Life Insurance — in the last year’s window.  The PFRDA Board had approved both the applications.

The ‘on tap’ system is similar to what the RBI had allowed for new banking entrants.

In March last year, the PFRDA had based on a new Request for Proposal (RFP) for appointment of pension fund managers awarded licences to eight sponsors of pension funds including Axis Asset Management. The other seven were the pension arms of SBI, UTI, LIC, ICICI, HDFC, Aditya Birla SunLife and Kotak. All these seven were fund managers of National Pension System (NPS) in the earlier regime.

Pension sector AUM

Besides throwing open the door to more pension fund managers, the RFP had introduced at least five fold jump in their fees, making it lucrative to undertake this activity.

Currently, the total assets under management (AUM) of the pension sector stood at over ₹7.40 lakh crore.

Pension assets in India have been growing at a compounded annual growth rate (CAGR) of about 30 per cent. However, last fiscal was an aberration with growth coming in at 27 per cent, lower than expected, due to the volatility in global equity and debt markets caused by the ongoing Russia-Ukraine conflict.

Published on July 21, 2022
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