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?