Pension regulator calls for fresh PoP applications

In a bid to expand the reach of the New Pension Scheme (NPS) for private citizens, which has only managed 2,300 subscribers since its launch five months ago, the Pension Fund Regulatory and Development Authority (PFRDA) has invited fresh applications from financial services providers for becoming the scheme?s Points of Presence (PoPs).

The NPS for private individuals already has 21 PoPs who act as the interface between the scheme and subscribers by opening NPS accounts and accepting contributions. However, they have not proved to be as successful as was initially expected by the PFRDA. In fact, data available with the regulator reveals that although the 21 PoPs have a total of 798 branches, they have managed to get just 2,291 subscribers as on October 16, 2009.

?PFRDA now wishes to expand the PoP network by appointing more entities as Points of Presence,? the RFP has explained. Regulated financial institutions with 25 branches spread over at least three states, a minimum net worth of Rs 100 crore and a three year track record of profitability are eligible to apply.

?From the start, we had always planned to allow more entities to join in as PoPs. This is just a part of that thought process,? a PFRDA official said.

While the lack of adequate awareness amongst potential investors about the scheme is one of the reasons for the poor response to it, another reason has been the poor performance by the PoP branches. In fact, three of the designated PoPs?State Bank of Indore, State Bank of Travancore and Union Bank of India have not opened even one NPS account till now.

The interim regulator has been regularly reviewing the performance of the PoPs and has even asked them to fix targets to ensure that adequate investors join the NPS.

In another setback to the scheme, the Insurance Regulatory and Development Authority had asked all insurance companies to refrain from selling NPS products. This had meant that Life Insurance Corporation (LIC) of India which had joined as a PoP was barred from the scheme and the PFRDA could not use its massive network.