In order to make the National Pension System (NPS) more transparent, improve the subscriber base and make sure orderly development, the pension fund regulator has taken a host of initiatives easing the method of transacting for the subscribers and the Points of Presence (PoP).
The Pension Fund Regulatory and Development Authority (PFRDA) has now issued recommendations for opening ‘on tap’ registration of pension funds on a continuous basis to handle the pension assets of NPS subscribers beneath central government schemes, state government schemes, private sector schemes and other schemes regulated by it. It has amended the NPS Trust regulations for monitoring and evaluation of all operational and service level or investment management activities of pension funds, trustee bank, custodians and of central recordkeeping agencies for exits and withdrawals. The regulator has also amended the Points of Presence (PoP) regulations to make them more effective.
Registration of new pension funds
Every year, the regulator will open ‘on tap’ registration for pension funds for 30 days. The interested entity will have to make an supply for becoming chosen as a sponsor of a pension fund. If chosen, it will have to float a separate enterprise to be registered as a pension fund by the regulator. A pension fund is an intermediary which has been granted a certificate of registration by PFRDA for getting contributions, accumulating them and generating payments to the subscriber. The pension fund will workout all due diligence and prudence in carrying out its duties and in safeguarding the rights and interests of the subscribers.
The pension fund will be topic to audit of pension schemes by the NPS Trust in accordance with the provisions of the PFRDA (NPS Trust) Regulations, PFRDA (Pension Fund) Regulations and provisions of Investment Management Agreement, and so forth. The industrial proposal of shortlisted applicants will be evaluated based on the quotes submitted against the applicable Investment Management Fee (IMF) variety. The ‘default scheme’ shall be managed by the pension funds which are government organizations. The sponsor of a pension fund will have at least 5 years’ encounter of fund management (equity as properly as debt market place).
The regulator has set a maximum investment management charge based on the assets beneath management—up to Rs 10,000 crore is .09% Rs 10,000 crore to Rs 50,000 crore is .06% Rs 50,000 crore to Rs 1,50,000 crore is .05% and above Rs 1,50,000 crore it is .03%. The applicants can quote and charge a reduced slab-sensible charge topic to a reduced cap of .03% for every slab. The prices of investment management charge involves brokerage, custodian charge and applicable taxes thereon, topic to maximum brokerage permitted to be charged to the scheme by the Pension Funds at .03% (such as applicable taxes on brokerage) on equity transactions only. The pension fund will load their investment management charges onto the net asset worth on day-to-day basis and the accrued charges (revenue) will be collected by it at the finish of every quarter, from the scheme bank accounts maintained with the trustee bank.
Points of Presence
For PoPs, the amended regulations underline that they have to transfer the contributions received from the subscriber or their employer or deducted from salary of the staff to the NPS Trust account maintained with the trustee bank and upload the subscriber contribution files with the central recordkeeping agency inside the timeframe laid down by the regulator.
Every point of presence will have a collection account in the name of “Name of the PoP–Collection Account – name of pension scheme– NPS Trust” and such an account shall be a non-withdrawable account with an alternative to transfer the funds to NPS Trust account or only in exceptional instances such as incorrect entries, unidentified entries or quantity not pertaining to subscriber contribution. All PoPs possessing bank accounts with diverse nomenclature will have to comply with this situation inside 90 days.