Pension regulator PFRDA sees pension assets under management (AUM) growing at robust 28-30 per cent next fiscal despite headwinds such as rising inflation and likely increase in interest rates in the country, its Chairman Supratim Bandyopadhyay has said.

This expected growth rate is higher than the 27 per cent growth recorded  in pension AUM this fiscal when total AUM has fallen short of the  ₹7.5-lakh crore target the regulator had set last year.

“This fiscal which will end in two days will see us falling short of the target due to the geo political tensions caused by the Russia-Ukraine war and the resultant market volatility in both equity and debt markets. We think we would end this fiscal at little over ₹7.30-lakh crore”, Bandopadhyay told BusinessLine here.

As of March 26 this fiscal, the pension AUM stood at ₹ 7.29-lakh crore. On March 27 last year, the Pension AUM was ₹5.75-lakh crore, official data with PFRDA showed.

Bandopadhyay, who described as a “blip” the missing of the target this fiscal, said there were several factors behind his optimism on improved AUM performance next fiscal.

The three main reasons behind the optimism include robust flows into the pension system given the increased salary levels (in both government and private sector); higher contribution due to 15 States and 3 Union Territories accepting to 14 per cent contribution and the recent budget extending tax breaks for such contribution. Also the number of non government subscribers are expected to go up in the NPS, he added.

PFRDA Chairman also said that the country is well on course towards achieving pension AUM of ₹ 30 lakh crore in 2030. He however noted that both rising inflation and expected increase in interest rates are big concern for the regulator. The rise in interest rates are a concern as 80 per cent of the pension assets are invested in the debt market.

New initiatives

 

Bandopadhyay said that he expects Pension Fund Regulatory and Development Authority (PFRDA) to next fiscal (2022-23) move ahead on introducing a Minimum Assured Return Scheme (MARS) for which the consultant has already started working towards framing the scheme.

He also sees the “legal separation”of the NPS Trust and PFRDA  becoming a reality in 2022-23 and the related legislative change to PFRDA law happening next fiscal.

Bandopadhyay also said that PFRDA is likely to give its “blessings” for setting up an industry body — it could be a non-profit with representation from pension fund managers, bigger PoPs and Central Record Keeping Agency (CRA) that will talk only about Pension and retirement solution products.

“We are also trying to have an industry body that could be promoted by NPS Trust. Now that we are growing to be a large industry, the need for such a body has arisen. This body will not only give a boost to the industry, it will also create awareness among people”, he said.

This industry body — some kind of an industry council — could become a reality in 2022-23. 

It maybe recalled that the insurance sector already has two industry bodies — Life Insurance Council and General Insurance Council. Both these had been created by the insurance regulator IRDAI.

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