National pension system: now a wider choice of pension funds in the NPS
In order to make the National Pension System (NPS) more transparent, increase the subscriber base and ensure orderly growth, the pension fund regulator has taken a series of initiatives that facilitate the transaction process for pensioners. subscribers and points of presence (PoP).
The Pension Fund Development and Regulatory Authority (PFRDA) has now issued guidelines for initiating “on-the-fly” registration of pension funds on an ongoing basis to manage subscriber retirement assets. to the NPS under central government plans, state public plans, private sector plans and other plans regulated by the private sector. It amended the NPS Trust regulations for monitoring and evaluation of all operational and service level or investment management activities of pension funds, trust bank, custodians and central record keeping agencies. for exits and withdrawals. The regulator has also changed the regulation of points of presence (PoP) to make them more efficient.
Registration of new pension funds
Each year, the regulator will open registration “on the fly” for pension funds for 30 days. The interested entity will have to make an offer to be selected as a sponsor of a pension fund. If selected, he will have to start a separate company to be registered as a pension fund by the regulator. A pension fund is an intermediary that has obtained a registration certificate from the PFRDA to collect contributions, accumulate them and make payments to the subscriber. The pension fund will exercise all the diligence and prudence necessary in the exercise of its functions and in the protection of the rights and interests of the subscribers.
The pension fund will be subject to a pension plan audit by the NPS Trust in accordance with the provisions of the PFRDA (NPS Trust) Regulation, the PFRDA (Pension Fund) Regulation and the provisions of the Investment Management Agreement, etc. The business proposal of the shortlisted candidates will be assessed based on the quotes submitted against the applicable Investment Management Fee (IMF) range. The “default scheme” will be managed by the pension funds which are public enterprises. The sponsor of a pension fund must have at least five years of experience in fund management (equity market and debt market).
The regulator has set maximum investment management fees based on assets under management – up to Rs 10,000 crore is 0.09%; Rs 10,000 crore to Rs 50,000 crore is 0.06%; Rs 50,000 crore to Rs 1,50,000 crore is 0.05% and above Rs 1,50,000 crore it is 0.03%. Applicants may propose and charge a lower fee per tile, subject to a lower cap of 0.03% for each tile. The investment management fee rates include brokerage fees, custody fees and applicable taxes thereon, subject to a maximum brokerage rate authorized to be charged to the plan by the pension funds at 0, 03% (including applicable brokerage taxes) on equity transactions only. The pension fund will charge its investment management fees out of the net asset value on a daily basis and the accrued charges (income) will be collected by it at the end of each quarter, on the scheme bank accounts maintained with the Pension Fund. fiduciary bank.
For PoPs, the amended regulation emphasizes that they must transfer contributions received from the subscriber or their employer or deducted from employees ‘salaries to the NPS Trust account maintained with the trust bank and upload the subscribers’ contribution files to the bank. central record keeping agency within the time limit set by the regulator.
Each point of presence will have a collection account in the name of “Name of the PoP – Collection account – name of the pension plan – NPS Trust” and such an account will be a non-withdrawable account with an option to transfer funds to NPS Trust account or only in exceptional cases such as incorrect entries, unidentified entries or an amount not belonging to the contribution of the subscriber. All PoPs with bank accounts with a different nomenclature will have to comply with this condition within 90 days.