Not happy with the poor response to the new pension system (NPS), sector regulator Pension Fund Regulatory and Development Authority (PFRDA) is examining the performance of financial institutions working as points of presence (PoPs) and is likely to cancel the licences of those performing poorly.
“We are reviewing the performance of PoPs. We do not want to clutter the space. We are yet to decide on who is to be blamed for their poor performance,” said PFRDA Chairman Yogesh Agarwal.
He added around 90 per cent PoPs have not performed up to the mark. The regulator is studying these PoPs and is in the process of issuing notices to those with low or no subscriptions.
There are 40 PoPs and the total subscription through them is around 30,000. Out of them, India Post has got the highest subscription of over 17,000.
PoPs are the distribution channel and are not involved in marketing the scheme. Also, there is no incentive for them to popularise the scheme.
The fee structure is such that it makes more sense for them to sell an insurance or a mutual fund product than a pension fund.
A committee headed by G N Bajpai is working on issues like fee structure and marketing. The committee is likely to come up with the report by January 2011 for public comments.
NPS was opened for all citizens, including unorganised sector workers, in May 2009. Six fund managers were appointed. Since May 2009, it has raised Rs 40 crore from the unorganised sector.
Recently, two companies joined NPS and brought around 4,000 pension accounts. “We are in talks with more companies who would like to enter the scheme,” said Agarwal.
