State Bank of India, LIC, UTI in race to become fund managers.
The Pension Fund Regulatory and Development Authority (PFRDA) has shortlisted 15 players, including SBI Pension Fund, LIC Pension Fund and UTI Retirement Solutions to become fund managers for the business that is due to be operational from April.
Sources at PFRDA said the companies have been asked to submit proposals to manage the pension funds for the non-government employees.
SBI Pension Fund, LIC Pension Fund and UTI Retirement Solutions are also the pension fund managers for the central government and state government employees.
“Of the 21 firms which submitted an expression of interest, 15 have been shortlisted and requests for proposals have been issued,” said a PFRDA official. The last date for submission of proposal is February 2.
After the selection process, the PFRDA is likely allow up to six firms to set up pension funds for the non-government employees. The regulator intends to appoint the fund managers by the second week of February.
Among the host of conditions specified in the Primary Information Memorandum and Expression of Interest package, the regulator intends to allow up to 26 per cent foreign investment but with the rider that the direct or indirect holding should not exceed 26 per cent.
Other conditions include — a new company has to be floated, which will get a ‘certificate of commencement of business’ from PFRDA; at least five years experience of fund management; monthly average assets under management not less than Rs 8,000 crore for the last 12 months and net worth of Rs 10 crore.
In the absence of a legal backing to issue guidelines for the business, a trust will sign an agreement on behalf of PFRDA to help the fund managers invest in accordance with the prescribed norms. The regulator intends to allow the fund managers to offer five-six schemes, of which one will be a 100 per cent debt plan, while another one will let investment mix between debt and equity to be decided by the age of the investor. The other schemes will allow investment of 15-85 per cent in equities, while the rest will be allocated to debt.
Meanwhile, it has already invited proposals from firms to function as points of presence (PoPs), where subscribers can deposit their funds. The last date for submission of proposal for PoPs is January 30. Banks, NBFCs and entities regulated by Sebi or the Insurance Regulatory and Development Authority can apply for PoPs.
