The newly empowered pension regulator has called for fresh bids for pension fund managers as the process through which the existing eight PFMs were selected last year raised many eyebrows and had to be undone.
According to official sources, the Pension Fund Regulatory and Development Authority (PFRDA) has just initiated a competitive bidding process for selection of the PFMs seeking those agreeing to levy the lowest fund management fee. The existing PFMs will have to re-bid to retain their mandate.
The process is part of the regulator's effort to roll back some of the steps taken by former chairman Yogesh Agarwal, which have come under the scanner of authorities. PFRDA, under Agarwal, had appointed new pension fund managers based on a set of criteria but sans the competitive bidding process. Agarwal had also raised fund management fees steeply from 0.0009% to up to 0.25% after some of them raised their expenses including wages and salaries, to justify higher fees.
"These deviations have come under the scanner of the Central Vigilance Commission and Comptroller and Auditor General of India," a finance ministry official said.
Soon after the PFRDA Bill was passed in September, the finance ministry asked Agarwal to step down before the completion of his term.
"Some of the earlier decisions like hiking fund management charges are now being undone. The request for proposal for (selection of PFMs) has already been called for and the last date for receiving the bids is February 14. After the technical and commercial bids, the letters of intent will be issued to shortlisted PFMs on March 4," an official familiar with the development told FE.
The three existing PFMs for the NPS of government employees are required to submit commercial bids only, while others will have to submit both technical and commercial bids.
PFRDA has over the years registered 8 PFMs promoted by LIC, SBI, UTI AMC, ICICI, HDFC, Kotak Mahindra, Reliance Capital and DSP Blackrock for managing the funds of private Sector NPS. Three PFMs promoted by PSU financial institutions LIC, SBI and UTI AMC manage the NPS corpus of government employees.