The Pension Fund Regulatory and Development Authority (PFRDA) has recently issued a Primary Information Memorandum and Expression of Interest (EOI) package for appointment of Pension Fund Managers for the New Pension System (NPS)
PFRDA has invited EOI only from public sector entities for sponsoring pension fund managers. As per the EOI, only Government entities, such as Central Government companies, public financial institutions etc. in which not less than 51% paid up share capital is held by Central Government or partly by Central Government and partly by one or more State Governments can apply. Further, to be eligible, the sponsors must have at least 5 years experience of fund management and average assets under management of the sponsors must not be less than Rs. 10,000 crores for the month of March 2007. Thus, even amongst public sector entities, only those with sufficient experience and financial strength can apply.
The selected public sector entity would be required to incorporate the pension fund manager as a separate public sector company. Both the sponsor as well as the pension fund manager would, therefore, be in the public sector. Direct or indirect foreign investment in the pension fund manager, if any, shall not exceed 26% of its paid up share capital. This is in accordance with the report of the Standing Committee on Finance which examined the PFRDA Bill, 2005.
Thus, no foreign or private firm would be eligible to apply for the pension fund business.
NOTE- Pension Fund Regulatory and Development Authority was established by the Government of India on 23rd August 2003 to promote old age income security by establishing, developing and regulating pension funds, to protect the interests of subscribers to schemes of pension funds and for matters connected therewith or incidental thereto.