PFRDA set to revise fee structure for pension fund managers from April

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Regulator PFRDA is set to revise the fee structure for pension fund managers from the next fiscal so that they get better income and more players are attracted to the space, a top official said.

“The revenue structure for fund managers is pretty low (as of now). We have already got the board approval (to revise the fee) and hopefully from April 1 we will increase their revenue structure,” Pension Fund Regulatory and Development Authority (PFRDA) Chairman Supratim Bandyopadhyay said.

He was speaking at a CII webinar on National Pension System (NPS) for Corporates. Bandyopadhyay said as as now the fund managers are charging only one basis point for every Rs 100 that they manage.

“That means if you give me Rs 100, the fund manager will only get one paise. An if you are aware about the fund manager charges in other fund management products, especially mutual funds, it is no where near to them,” he said.

The PFRDA chairman also said more corporates should join the pension scheme for their employees and their HR can play a crucial role in encouraging their staff.

The revised revenue structure for fund managers is expected to have a bearing on the subscribers as well. As per the revised revenue structure, PFRDA has chalked out a staggered based model, under which different slabs of management fee will be applicable on different slabs of AUMs (assets under management).

According to these slabs, for AUMs up to Rs 10,000 crore, the maximum investment management fee will be 0.09 per cent. From Rs 10,001-Rs 50,000 crore, the fee has been capped at 0.06 per cent; Rs 50,001-1,50,000 crore at 0.05 per cent and for AUMs crossing Rs 1,50,000 crore, the management fee will be 0.04 per cent.

At end of February 2021, AUMs of PFRDA’s flagship NPS and APY schemes stood at Rs 5,59,594 crore, up by 33.1 per cent from a year ago.

Currently, there are a total of seven fund managers that manage the pension fund corpus of the Authority.

These are — ICICI Prudential Pension Funds Management Company Ltd; LIC Pension Fund Ltd; Kotak Mahindra Pension Fund Ltd; SBI Pension Fund Pvt Ltd; UTI Retirement Solutions Ltd; HDFC Pension Management Co Ltd and Birla Sun Life Pension Management Ltd.

As on date, there are over 4.14 crore subscribers under the National Pension System (NPS) and Atal Pension Yojana (APY). Of these, APY subscribers constitute over 2.72 crore.

Kicked off from January 2004, NPS was initially notified for central government employees and was subsequently adopted by almost all state governments for their employees.

The scheme was later extended to all Indian citizens (resident/non-resident/overseas) on a voluntary basis.

APY on the other hand is mainly targeted to cater to the pension needs of the unorganised sector employees who form a major part of employment in India.