FDI in each PFM. FDI is important for insurance sector as it is a capital guzzler. FDI is needed in pension for attracting technology and expertise.
But donít you expect foreign pension funds to forge joint ventures with Indian firms for pension foray?
Some of the foreign companies have already tied up with Indian firms and formed pension fund management companiesóReliance Capital has a joint venture with Nippon and DSP has tied with Blackrock. Both of them have got licences.
How do you intend to tackle the competition that NPS faces with similar products of insurance, mutual funds and even EPFO?
NPS is the only genuine pension product in the country. Others are masquerading as pension products but are not pure pension products. They are pretenders. They were being sold because NPS was not available a few years ago. NPS has the least cost and the best returns. Soon, those pension products of insurers will see a decline in their business now that NPS has picked up.
There has been comparison between PFRDA-regulated NPS and EPFOís schemes over benefits and charges. How do you justify that NPS is better?
The track record speaks for that. The NPS offers far superior returns than EPFO schemes. Even the finance minister has said that new subscribers of Employees Pension Scheme (EPS) should be shifted to NPS. There is an element of subsidy in EPS but not in the case of NPS. World over, everybody is going for market returns. Even the EPF is offering market returns as the interest is dependent on returns from GSec, state government securities and PSU bonds. As interest rates have fallen over the decades, the EPF has been lowering its interest to subscribers. There is no getting away from the market. The other way is to ensure high returns is getting government subsidies.
While it is true that market fluctuations will not affect EPFOís returns as it doesnít trade in bonds, the PFMs under NPS trade in bonds and equities to reap the benefits of capital appreciation and pass on the benefits to subscribers. Thatís the professional way of managing investment. After all, thatís what they (PFMs) are paid for. Thatís what PFMs and MFs are all about.
Not all the PFMs have performed better as the NAVs vary across schemes and PFMs. How will you ensure that investors get the best deal?
We evaluate PFMs every month. Crisil has been appointed as a consultant to carry