Armed with statutory status and more powers, pension regulator PFRDA is revamping all its guidelines to foster competition while ensuring all entrants pass the stringent 'fit and proper' test before they get to manage funds under the National Pension System (NPS).
After the PFRDA Act was passed by the UPA government in September 2013 and notified on February 1, 2014, the regulator has started framing regulations while reviewing all guidelines it had issued in the past so that provisions could be revised to conform with the new legislation and strengthen some clauses according to the need of the day.
"Earlier, we had issued guidelines. Now that the PFRDA Bill has been enacted, we are framing the regulations under the PFRDA Act ," PFRDA chairman RV Verma told FE. “We have so far drawn up 12 regulations in all, including the two latest regulations on pension fund management and NPS Trust."
While the main thrust is to expand the scope and coverage of NPS across the length and breadth of the country and across all segments of the population in the formal and the unorganised sector, a market-based and sustainable approach by encouraging competition through entry of more number of players and ensuring efficient pricing, will make the pension market more robust and inclusive, he said.
In this context, Verma said the 'fit and proper' criteria has been made more specific to make due diligence for the pension funds more robust.
The move assumes importance in the wake of rising demand for pension cover in a country where less than 20% of the population has some form of savings to fall back on after retirement. Since inception in 2004, the NPS subscriber base has grown to about 7 million by the end of June 2014, with the corpus growing to about R58,000 crore.
The draft regulations put out by the pension regulator as per the PFRDA Act stipulate a cap on foreign stake at 26% in the sponsor company or such percentage as may be approved for an Indian insurance company, whichever is higher.
The eligibility criteria for a company to become a pension fund manager for the NPS also includes a minimum capital of R25 crore, five years of experience in fund management (both equity and debt), a positive networth for five years and a three-year profit record apart from being regulated by any of the financial sector regulators — RBI, Sebi and Irda.
To ensure that only serious players enter the pension sector, PFRDA has mandated that a company will not be given licence if the sponsor of pension fund or its principal officer or key management personnel has been convicted by a court for any economic offence or fraud. A company will be debarred from NPS also if any of the other financial regulators have cancelled its licence or charged any of its top official with market manipulation or insider trading or unfair trade practices.
Source : http://www.financialexpress.com/
After the PFRDA Act was passed by the UPA government in September 2013 and notified on February 1, 2014, the regulator has started framing regulations while reviewing all guidelines it had issued in the past so that provisions could be revised to conform with the new legislation and strengthen some clauses according to the need of the day.
"Earlier, we had issued guidelines. Now that the PFRDA Bill has been enacted, we are framing the regulations under the PFRDA Act ," PFRDA chairman RV Verma told FE. “We have so far drawn up 12 regulations in all, including the two latest regulations on pension fund management and NPS Trust."
While the main thrust is to expand the scope and coverage of NPS across the length and breadth of the country and across all segments of the population in the formal and the unorganised sector, a market-based and sustainable approach by encouraging competition through entry of more number of players and ensuring efficient pricing, will make the pension market more robust and inclusive, he said.
In this context, Verma said the 'fit and proper' criteria has been made more specific to make due diligence for the pension funds more robust.
The move assumes importance in the wake of rising demand for pension cover in a country where less than 20% of the population has some form of savings to fall back on after retirement. Since inception in 2004, the NPS subscriber base has grown to about 7 million by the end of June 2014, with the corpus growing to about R58,000 crore.
The draft regulations put out by the pension regulator as per the PFRDA Act stipulate a cap on foreign stake at 26% in the sponsor company or such percentage as may be approved for an Indian insurance company, whichever is higher.
The eligibility criteria for a company to become a pension fund manager for the NPS also includes a minimum capital of R25 crore, five years of experience in fund management (both equity and debt), a positive networth for five years and a three-year profit record apart from being regulated by any of the financial sector regulators — RBI, Sebi and Irda.
To ensure that only serious players enter the pension sector, PFRDA has mandated that a company will not be given licence if the sponsor of pension fund or its principal officer or key management personnel has been convicted by a court for any economic offence or fraud. A company will be debarred from NPS also if any of the other financial regulators have cancelled its licence or charged any of its top official with market manipulation or insider trading or unfair trade practices.
Source : http://www.financialexpress.com/
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