Pension fund regulator PFRDA has invited application for a bank to act as National Pension System (NPS) trustee to facilitate fund transfers across entities such as annuity service providers and subscribers, presently being managed by Axis Bank. PFRDA has said that the NPS Trustee Bank...Shall be required to provide banking facilities as directed by NPS Trust under the prescribed regulations and guidelines.
Presently NPS has more than 87 lakh subscribers with Asset Under Management (AUM) of over Rs 80,800 crore. The NPS Trust, responsible for taking care of the funds under the NPS, holds accounts with the NPS Trustee Bank. The Trustee Bank facilitate fund transfers across various entities of Central Recordkeeping Agencies (CRAs) system -- nodal offices, aggregators, pension funds, annuity service providers and subscribers, among others.
Currently, eight pension fund managers (PFMs) manage private-sector funds, and only three run by nationalized financial institutions are allowed to manage central and state government funds. Given the low volumes and the asset management fee of 0.01%, managing only private-sector funds becomes unviable for PFMs. Recently, the government has given mandate to the PFRDA to administer 'Atal Pension Yojana-(APY)' through Banks. The government has raised the foreign direct investment (FDI) limit in the sector to 49% last month and the entry of foreign pension funds will facilitate the government’s efforts to ensure a rapid increase in pension coverage of the private-sector workforce in India.