The pension regulator today sought bids from banks, non-banking finance companies and those entities which are regulated by the Securities and Exchange Board of India or the Insurance Regulatory and Development Authority to appoint points of presence (PoPs), which will be the interface with investors.
The move will help complete the architecture to enable citizens, other than those in the government, to use the alternate retirement savings mechanism. Pension Fund Regulatory & Development Authority (PFRDA) intends to roll out the new scheme from April 1.
According to the request for proposal for registration of PoPs banks and other entities which will register individuals as subscribers to pension funds can charge up to Rs 40 for registering the subscriber and up to Rs 20 for any other service offered to them.
The other services would include the regular contribution, change in subscriber details, switching of schemes or fund manager, withdrawal request of print-out of the account statement, the Pension Fund Regulatory & Development Authority said while calling for applications from points of presence.
The pension system will be two-tiered with the first being non-withdrawable pension account and the second being withdrawable savings account.
PFRDA intends to undertake the process of registration of PoPs in phases with the number of such entities expected to increase as more subscribers opt for this savings mechanism.
In the first phase, PFRDA will register designated branches of PoPs as service providers for five years.
The PoPs are expected to address queries of potential subscribers regarding the new pension system and provide PFRDA-approved information. They have to seek applications from subscribers who meet the prescribed know-your-customer norms, verify them and collect contributions. The application form will be passed on the central record-keeping agency (CRA).
Initially, the CRA facilitation centres are expected to come up across 50 cities. The CRA will pass the information back to the PoP and upload the data. The CRA will simultaneously arrange transfer the funds into the account of the new pension system maintained with the trustee bank. The funds have to be remitted on at least T+1 basis.
Any entity which has at least 25 branches, covering at least 25 districts spreading in three or more states with each branch conforming to IT infrastructure and capacity to electronically link to the CRA is eligible to bid. The minimum net worth requirement is Rs 100 crore as on March 31, 2008. The entities will need a three year track record of profitability and should have been in the business of marketing or selling of retail financial services.
