Download the New Application From the Following link.
Download
Monday, November 29, 2010
Tuesday, November 9, 2010
Issues With NPS - Interview with PFRDA Chairman
source: dnaindia.com
With 40 financial institutions deployed as points of presence (PoPs) and six fund managers, the New Pension Scheme (NPS) is yet to take off. Pension Fund Regulatory and Development Authority (PFRDA) chairman Yogesh Agarwal spells out to DNA the issues with the NPS and what is expected from the Bajpai committee report. Excerpts:
What are your expectations from the Bajpai committee?
I expect it to show us the way, as there is no stake holder in the whole business today. I think the Bajpai committee will be able to tell us whether pension fund managers should be treated as stake holders or should be given a bigger role. Apart from managing the funds, they should also have a role in marketing the product and make people aware of it. For this, they need to be given incentive and the fee structure needs to be changed. Only then will we see the number of players going up from the six we have now.
How many new fund managers will be appointed?
There is no ideal number. Anybody meeting the criteria laid will be appointed.
Is there any scope of changing the investment pattern for fund managers?
Investment pattern is not a big issue with us at present.
Will revising fee structure help NPS take off or does it also need a new marketing strategy?
There is no marketing strategy, new or old. In fact, the frame of the fee structure is necessary, as they have to be seen as linked. For marketing, you have to raise the fee structure, otherwise who will market at these rates. These two are inter-linked and cannot be seen separately. Fund managers have to be given a bigger role; currently they don’t have a role in marketing. In fact, nobody has a role in marketing. If fund managers are given the marketing role, the cost involved will have to be compensated. As the functions increase, the fee structure has to go up.
Can PoPs be used for marketing?
PoPs cannot be used to market, as they are distribution channel. Its like these are banks primarily and they have much better products to market. Whoever plays the role, will need to be incentivised. Right now, with the kind of fee structure, if they sell an insurance product or a mutual fund product, they get a larger pie. To sell a pension fund they get nothing.
What kind of marketing strategy will the pension fund managers adopt?
With 40 financial institutions deployed as points of presence (PoPs) and six fund managers, the New Pension Scheme (NPS) is yet to take off. Pension Fund Regulatory and Development Authority (PFRDA) chairman Yogesh Agarwal spells out to DNA the issues with the NPS and what is expected from the Bajpai committee report. Excerpts:
What are your expectations from the Bajpai committee?
I expect it to show us the way, as there is no stake holder in the whole business today. I think the Bajpai committee will be able to tell us whether pension fund managers should be treated as stake holders or should be given a bigger role. Apart from managing the funds, they should also have a role in marketing the product and make people aware of it. For this, they need to be given incentive and the fee structure needs to be changed. Only then will we see the number of players going up from the six we have now.
How many new fund managers will be appointed?
There is no ideal number. Anybody meeting the criteria laid will be appointed.
Is there any scope of changing the investment pattern for fund managers?
Investment pattern is not a big issue with us at present.
Will revising fee structure help NPS take off or does it also need a new marketing strategy?
There is no marketing strategy, new or old. In fact, the frame of the fee structure is necessary, as they have to be seen as linked. For marketing, you have to raise the fee structure, otherwise who will market at these rates. These two are inter-linked and cannot be seen separately. Fund managers have to be given a bigger role; currently they don’t have a role in marketing. In fact, nobody has a role in marketing. If fund managers are given the marketing role, the cost involved will have to be compensated. As the functions increase, the fee structure has to go up.
Can PoPs be used for marketing?
PoPs cannot be used to market, as they are distribution channel. Its like these are banks primarily and they have much better products to market. Whoever plays the role, will need to be incentivised. Right now, with the kind of fee structure, if they sell an insurance product or a mutual fund product, they get a larger pie. To sell a pension fund they get nothing.
What kind of marketing strategy will the pension fund managers adopt?
NPS Fee may be hiked
Source: sify.com/finance
Increase to be based on recommendations by Bajpai Panel, more players to be included.
There is good news for fund houses managing funds under the New Pension Scheme (NPS). The Pension Fund Regulatory and Development Authority (PFRDA) on Tuesday indicated that the fee structure, both to brokers and distributers, could see an increase once the G N Bajpai panel submits its report by December-end. In addition, there could be an increase in the number of fund houses managing the corpus as well.
Speaking on the sidelines of a Federation of Indian Chambers of Commerce and Industries (FICCI) function on the pension funds management, PFRDA chairman Yogesh Agarwal told reporters, " If the fee structure is opened up further, it will have look at giving room for more fund managers."
The pension regulator had appointed six pension fund managers (PFMs) – SBI Pension Funds, UTI Retirement Solutions, Reliance Capital Pension Funds, ICICI Prudential Pension Funds, Kotak Mahindra Pension Funds and IDFC Pension Funds Management Company – to manage the NPS corpus. These players were selected after a competitive bidding process.
The existing fund management charges are 0.0009 per cent of the asset under management, which is valid for three years. Even the distributors such as, point-of-presence participants are paid a flat charge of Rs 40 for opening the account and per transaction fee of Rs 20. Consequently, both fund houses and distributors have been unwilling to promote NPS aggressively. "In the present structure, this brings in revenues of Rs 100 in the first year to the POP and Rs 80 in the subsequent years," said Agarwal.
Agarwal also added that there were talks about reasonableness and adequacy of charges. Since PFMs are required to be distinct legal entities, separate from their sponsors, and therefore have to be financially self-sufficient to be long-term players.
Said a CEO of one of the top-five fund houses, "The present structure does not make this a profitable venture for mutual funds because we have to dedicate manpower." He said that the mutual fund industry is managing around Rs 3 lakh crore in short-term liquid funds.
Subscribe to:
Posts (Atom)