In a bid to improve the performance of the recently launched New Pension Scheme (NPS), the Pension Fund Regulatory & Development Authority (PFRDA) has agreed to allow the six players it has appointed to manage the funds for the retail unorganised sector to market the product. But this permission comes with a rider that they cannot pass on the marketing costs to the customers.
The orginal NPS plan, which has been unveiled in phases for government employees and the unorganised sector, prohibit any kind of marketing either by the fund managers or by points of sales (POS), who are the collecting agents for the customers.
With a view to controlling the costs, the NPS architect has entrusted the responsibility of marketing and advertising for the whole industry to PFRDA.
However, the fact that the retail NPS, launched in May, has hardly received any response, seems to have prompting PFRDA to modify the orginal provision on marketing.
PFRDA chairman D Swarup said the authority has no objection if the pension funds licensed by it market their products.
?The only thing is that they cannot increase the cost of the product to the subscriber while doing so. Otherwise, they are free to do that. Some companies like ICICI Pru Pension Fund are already doing it. Kotak Mahindra Pension Fund has also informed us about it. Anyone can do it. But, they cannot charge separately for this,?? he told FE.
Though the NPS has mobilised about Rs 3,000 crore, the retail contribution has been very marginal. However, Swarup did hope that the amount would double by the fiscal-end.
The chairman said the regulator is planning to enlarge the number of points of sale (POS) so that more customers can have access for pension fund products within the ambit of the NPS.
?And as and when demand comes, we will be adding more fund managers, to the existing six (in the retail segment), in due course of time. But, it is a slow process and it will take time. At the moment we have no plans as such. Because, I personally think the more the fund managers in the market, the more will be the confusion for the subscribers in choosing their fund manager,?? he said.