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PFRDA likely to finalise guaranteed return product under NPS by fiscal end

Pension Fund Regulatory and Development Authority (PFRDA) on Thursday said it expects to finalise the assured return product under the National Pension System (NPS) by the end of this fiscal. The regulator’s Chairman Supratim Bandyopadhyay said talks were already held last year on the minimum assured return product.

NPS is a market linked insurance product and it has been generating returns close to 10 per cent in the last ten years.

Addressing a news conference, Bandyopadhyay said that whatever guaranteed products were there in the insurance sector, they were slowly withdrawn as it was felt that they were not feasible for a long period for the organisations. Even market regulator Sebi does not encourage any guaranteed products.

“It is part of our Act (to offer guaranteed product), we have to do it. The moment you give a guaranteed product, the capital adequacy requirement for the fund managers goes up. Currently, what we are doing (is) that the product is absolutely marked-to-market basis. So, we are not taking any investment risk on ourselves,” he said.

He also said that the regulator will be forming a committee very shortly. “We will formulate a product this financial year and give it to the board. May be in the next six months you may see that a product is ready but launch my take time,” he added.

Bandyopadhyay also said there is going to be a different charge/ fee structure for the guaranteed product and there has to be a separate guarantee fee to be charged by the fund managers, the moment one asks for a guarantee.

“So all these are factors that we have to decide, we have to see what should be the ideal fee so that the fund managers can manage their cost,” he said.

Besides, the regulator is mulling a universal pension scheme.

“We have given a presentation (to the finance ministry) on universal pension and auto enrolment already. What we are trying to do is that a large number of people should come under the ambit of pension which is not happening today, especially in small businesses and unorganised groups where there are less than 20 people.

“So we are seeing if we can bring them under the ambit of NPS or APY (Atal Pension Yojana),” Bandyopadhyay said.

About the returns that NPS can generate during the current fiscal, PFRDA chief said that so far the equity returns have been down due to the pandemic.

“It is almost 40 per cent down from what it was in January or early February, even as the market regained afterwards, in the current year, the return may be less,” he added.



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