PFRDA frames regulation for NPS Trust, Pension Fund managers

Pension fund regulator PFRDA has framed regulation for two key operative arms - NPS Trust and Pension Fund managers - for expansion and deepening of the sector.
The National Pension System (NPS) Trust is set up and constituted for taking care of the assets and funds under the NPS in the interest of the subscribers, said the regulation issued by the regulator as per the PFRDA Act.
NPS Trust shall be the nodal point for coordination of operations of all intermediaries, it said.
"NPS Trust is the operating arm of the PFRDA which will also coordinate and oversee the activities of all other intermediaries which include pension fund, Central Record keeping Agency (CRA), Points of Presence (PoP) and aggregators," PFRDA acting chairman R V Verma told PTI.

The regulator also issued regulations for the important intermediary Pension Fund which would invest assets accumulated by NPS Trust.
Pension Fund means an intermediary which has been granted a certificate of registration as a fund for receiving contributions, accumulating them and making payments to the subscriber, according to PFRDA (Pension Fund) Regulations, 2014.

There would be a choice of multiple Pension Funds and the number of pension funds would be determined by the Authority, in the public interest, it said.
The sponsor or sponsors of a pension fund would at no time either directly or indirectly hold more than 26 per cent of the equity stake in CRA or custodian or the trustee bank, it said.

It said such fund would also not engage in any other business activity except those relating to pension schemes regulated by the Authority.
The management fee would be 0.005 per cent of assets under management (AUM) or Rs 10 lakh whichever is higher, it said.
These two regulations that are now in place are very important as they provide a framework for the operation and implementation of NPS, Verma said.
"These among other regulations already framed by the PFRDA mark an important milestone in development and expansion of the market oriented pension industry in India as envisaged under the PFRDA Act," he said.

The regulation said the investment management fee is to be calculated on the AUM on a daily accrual basis and charged to the scheme at the end of every quarter.
"The investment management fee is inclusive of brokerage but exclusive of custodian fee and applicable taxes. All other costs shall be borne by the pension fund and shall not be reimbursed or charged to the scheme by the pension fund," it said.