The Pension Fund Regulatory Development Authority (PFRDA) is likely to allocate Rs 4,100 crore in 2010-11 among the three pension managers, State Bank of India, UTI Mutual Fund and LIC Mutual Fund. Last year, the regulator had allocated Rs 3,700 crore.
The corpus would mainly be the contribution of central and state government employees. At present, 25 states have signed up for the new pension scheme (NPS).
The NPS’ board of trustees met yesterday and decided to review the allocation formula. The allocations will be decided on the basis of the managers’ performance over the past year. According to PFRDA’s website, SBI’s pension fund had the highest net asset value (NAV) under central government schemes. As on April 23, SBI pension fund had an NAV of Rs 12.82 for central government employees, while UTI Retirement Solutions posted an NAV of Rs 12.38. LIC Pension Fund’s NAV was Rs 12.41.
The final decision will be taken by the NPS’ board of trustees on Monday. Last year, SBI had got 40 per cent, UTI MF 31 per cent and LIC MF 29 per cent.
The media budget for 2010-11 will be in the range of Rs 8-10 crore. “We are working on a media plan and going forward, we will not just have investor awareness programmes but also advertisements which attract reader interest,” said a source.
“A number of multinationals have approached us for managing their employees’ pension assets. Among public sector companies, Nalco (National Aluminium Company) has already signed up whille DVC (Damodar Valley Corporation) is in the process of doing so. We are also in talks with Pawan Hans Helicopters, Power Grid Corporation, Konkan Railway and public sector insurance companies,” said a senior PFRDA official. SBI will also invest a portion of its pension liabilities fund into NPS for meeting the requirements of its older recruits.
Although completing close to a year, the NPS for the unorganised sector has been able to build a corpus of only Rs 10 crore, with 4,500 investors. This is mainly due to lack of incentives for points of presence (PoPs), competition from insurance companies, tax disparity and lack of investor awareness.
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PFRDA would soon invite fresh bids for the Central Record-keeping Agency, the CRA. At present, NSDL is the central record-keeping agency and charges Rs 470 per account. In spite of keeping other charges such as fund management and PoP quite low, the present CRA charges are quite high, a reason why PFRDA wants to bring competition and reduce costs. This time, the bids are most likely to be opened for private players as well. PFRDA has also lowered the eligibility criteria for PoPs from Rs 100 crore to Rs 10 crore. To encourage small investors, the Budget announced the government’s intention to contribute Rs 1,000 per year to every new NPS account opened this year. The scheme, ‘Swavalamban’, will be extended to those who join with a minimum contribution of Rs 1,000 and a maximum contribution of Rs 12,000 per year during 2010-11. States such as Haryana and Karnataka are offering an additional contribution of Rs 1,000 per year.
PFRDA has also launched a small-ticket pension scheme called NPS Lite. This is mainly aimed at helping self-help groups invest their money in NPS. Under NPS Lite, the minimum annual investment limit is Rs 2,000, lower than the Rs 6,000 per annum for the unorganised sector. The annual record-keeping charges have been brought down to Rs 65-70.