PFRDA to fi­nalise guar­an­teed plan with min­i­mum re­turn by Fy21-end

Business Standard - - ECONOMY & PUBLIC AFFAIRS - INDIVJAL DHASMANA New Delhi, 15 Oc­to­ber

The pen­sion fund reg­u­la­tor will fi­nalise a guar­an­teed prod­uct, which will as­sure min­i­mum re­turn by the end of this fis­cal year. Be­sides, it is likely to raise the cap on the fee for pen­sion fund man­agers from 1 ba­sis point (bps) of as­sets un­der man­age­ment (AUM).

“This fis­cal year, we will for­mu­late a prod­uct. We will give it to the board for ap­proval and then launch it,”

Pen­sion Fund Reg­u­la­tory and

De­vel­op­ment Author­ity

(PFRDA) Chair­man Supra­tim Bandy­opad­hyay told re­porters through a virtual press con­fer­ence.

He said the as­sured min­i­mum schemes in the in­sur­ance and mu­tual fund (MF) sec­tors have not done very well. “What­ever guar­an­teed prod­ucts were there in the in­sur­ance sec­tor were with­drawn be­cause it was felt that giv­ing guar­an­tee for long pe­ri­ods may not be in the in­ter­ests of the or­gan­i­sa­tion.

The Se­cu­ri­ties and Ex­change

Board of In­dia does not en­cour­age any guar­an­teed prod­uct,” he said. How­ever, it will be in­tro­duced since it is part of the PFRDA Act.

“The mo­ment you give guar­an­tee and the mar­kets move down, fund man­agers will have to bring in ad­di­tional cap­i­tal. So, ac­tu­ar­ial in­puts are nec­es­sary. Not only cap­i­tal re­quire­ments, there are go­ing to be dif­fer­ent charge struc­tures. There has to be a sep­a­rate guar­an­tee fee,” the reg­u­la­tor said.

On in­creas­ing the cap on fee for pen­sion fund man­agers, Band­hy­opad­hyay said, “Our board has ap­proved the for­ma­tion of a com­mit­tee to rec­om­mend a cap on fees. We are ex­pect­ing a re­port some­time next week. By the sec­ond or third week of Novem­ber, the board will ap­prove th­ese rates.” Af­ter that, PFRDA will is­sue re­quests for pro­pos­als for new fund man­agers by early December.

Bandy­opad­hyay said PFRDA need not give ac­tu­ar­ial eval­u­a­tion of Na­tional Pen­sion Sys­tem (NPS) as was pointed out by the Comptrolle­r and Au­di­tor Gen­eral of In­dia. Once this prod­uct is launched, then eval­u­a­tion would be­come nec­es­sary. For Atal Pen­sion Yo­jana, ac­tu­ar­ial val­u­a­tion is be­ing given.

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