The commercial bid for selection of eight pension fund managers will be opened on 27th March 2014 by the Pension Fund Regulatory and Development Authority (PFRDA) for the management of corpus under the New Pension System (NPS). Earlier this year an auction was organized by the pension regulator for selection of pension fund manager. He needs to manage the corpus of NPS for private sector employees. If the public sector employees want management under NPS then they can voluntary opt for the same.
As per the revised process of September 2012, any fund management entity with sound technical qualification could enter the ring till the time they are comfortable working with the fee cap of 0.25 percent of the resources under the fund management. This auction route is an exit to the above existing process and few private fund managers believe it is like a return of license raj where you need to bid to have permission for fund management.
This auction system is expected to aspire fund managers to make the cut. Others are expected to carry their business within the provided fee structure and match the lowest fee quoted.
Stats show an increase in the fee of fund management from 0.0102% to 0.25% i.e. about Rs 2600 crore from Rs. 400 crore in September 2012, resulted in shooting up of assets under fund management for NPS-private.
For market development of NPS and turn it into a mass retail product, numerous private fund managers are looking forwards to a motivational fee structure. Candidates are also worried about the fact that any permission granted to manage funds will have a validity of only 5 years. They are looking for an open-ended arrangement for management of pension funds like a banking license.
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