Earlier this fee was 0.01 per cent of Assets Under Management (AUM), which caused pension fund managers to work at very low cost. But the increase in fees will bring most of the PFMs to profit. With the new FDI cap in insurance, foreign companies will also show interest in this sector.
Soon you will have to pay a higher fee on your investment in the National Pension System (NPS). The Pension Fund Regulatory and Development Authority (PFRDA) has allowed pension fund managers (PFMs) to levy fees beyond 1 April 2021. The regulator proposed a high fee structure in a Request for Proposals (RFP) issued last year, which was to take effect after a new round of licensing for PFM. Mint quoted sources as saying that this round has been completed.
In the new proposal, along with higher fees in the pension sector, there is also a proposal to increase FDI in insurance sector from 49 percent to 74 percent, an official said. This is because FDI in insurance is linked to FDI by the PFRD Act. However, both direct and indirect ownership should be considered when calculating FDI cap under PFRDA rules.
How much was the fee till now
Earlier this fee was 0.01 per cent of Assets Under Management (AUM), which caused pension fund managers to work at very low cost. But the increase in fees will bring most of the PFMs to profit. With the new FDI cap in insurance, foreign companies will also show interest in this sector. According to the AFP released on December 23, the PFMs fee capacity will be reduced for higher levels of capital assets on a graded basis linked to assets managed by the PFM.
What is the maximum cap up to 10 thousand crores
The maximum cap for Asset Under Management (AUM) has been fixed at 0.09 percent up to ten thousand crore rupees. PFMs with an AUM ranging from Rs 10,001 crore to Rs 50,000 crore will be allowed to charge up to 0.06 per cent. With an AUM ranging from Rs 50,001 crore to Rs 1,50,000 crore, 0.05 per cent fee will be allowed. PFMs with an AUM of more than Rs 1,50,000 crore will be allowed to charge a maximum of 0.03 per cent.
How many customers are there in NPS
As of January 2021, the National Pension System (NPS) had 98 lakh subscribers. His AUM was Rs 5.56 lakh crore. However, bulk assets are managed by three sector PFMs – SBI Mutual Fund Private Limited, UTI Retirement Solution Limited and LIC Pension Fund Limited.
A senior official said that 5 pension fund managers have been licensed in the new tender, including SBI Pension Fund Private Limited, LIC Pension Fund Limited, UTI Retirement Solution Limited and HDFC Pension Fund Company along with new fee cap to ICICI Prudential Pension Fund Management Company. Has been approved under