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HDFC Pension Fund will continue as a fund manager for the private sector National Pension System (NPS) of the Pension Fund Regulatory and Development Authority (PFRDA). PFRDA had disqualified the company from the re-selection process of NPS managers in private sector.
HDFC Life had last week filed a Writ petition challenging the PFRDA's Request for Proposal, the NPS license bid process and the wrongful disqualification/ rejection of HDFC Life’s bid.
The Company had sought the Court’s intervention to protect its rights and that of its subsidiary, HDFC Pension Management Co Ltd, of continuing to undertake the pension business. Upholding their contentions, the Court had directed the PFRDA inter alia to open our technical bid along with bids of other bidders and evaluate the same in accordance with the law.
In view of further developments in the matter, the Company was advised to file a fresh Writ petition. The same was filed in the Delhi High Court yesterday.
“The Hon’ble Court was pleased to direct that the Parties shall maintain Status Quo as of now with respect to the licenses. This would effectively mean that the Company's pension subsidiary can continue to engage in pension business, unless the Court decides otherwise,” the company spokesperson said.
The spokesperson said that they have communicated the Court’s Order to PFRDA, and hope for its compliance by PFRDA in letter and spirit.
“We also hope that good sense shall prevail, and PFRDA will recognize our bona fide rights to continue our pension business through our Subsidiary, HDFC Pension Management Co Ltd,” added the company.
HDFC Life said that they will continue to take all necessary measures to protect our business and licenses, particularly considering that we were licensed just a year back and now are being sought to be disqualified on the grounds which were applicable earlier as well, but PFRDA exercising its diligence and reposing faith in our strength and credibility had agreed to issue the license.
Meanwhile, the pension sector regulator will today give the final letters of intent to the selected fund managers of the private sector National Pension System (NPS). While all the existing fund managers in the private sector have applied, apart from two new entities, it is anticipated that not all the players will become fund managers.
Apart from HDFC Pension Fund which has a status quo, others like SBI Pension Fund, LIC Pension Fund, UTI Retirement Solutions, ICICI Prudential Pension Funds, Kotak Mahindra Pension Fund, Reliance Capital Pension Fund and DSP BlackRock Pension Fund Managers have applied.
There are also two new entities, Tata Mutual Fund and Birla Sun Life Insurance, who are part of this process. Sources said that Reliance MF had emerged the lowest bidder at one paisa for every Rs 100 of NPS funds, and others will be required to match it.
In January 2014, PFRDA decided that there will be a re-selection process for private sector fund managers for NPS. The licenses that would be issued post this will be valid for five years. Again after five years, there would be another process of re-selection.
To be eligible for managing private sector NPS, the entity must be in a registered financial services business, monitored by the authority or the Reserve Bank or the Securities and Exchange Board of India or the insurance regulatory body. It also must have a positive net worth (meaning, a profit) and be engaged in financial business for the preceding five years.
NPS is the contributory pension scheme launched by the Union government in January 2004. It was made compulsory for all new government employees. Those in all non-governmental livelihoods, including those not in any organised sector, were invited to join from 2009. As on end-December 2013, the NPS had 5.85 million subscribers, with an AUM (assets under management) of Rs 42,205 crore.
