PFRDA to nominate marketing consultant to design Minimum Assured Return Scheme beneath NPS

NEW DELHI: Pension Fund Regulatory and Development Authority (PFRDA) has issued the request for proposal (RFP) for the appointment of a marketing consultant to assist design a Minimum Assured Return Scheme (MARS) beneath the National Pension System (NPS).

The central authorities had launched NPS mandatorily for its new workers from 1 January 2004, and subsequently, nearly all of the state governments have adopted NPS for his or her workers. NPS can also be provided voluntarily to residents of India beneath the Unorganized Sector (UoS) Model, Corporate Model and Non-Resident Indian (NRI)/Overseas Citizen of India (OCI) Model.

According to the PFRDA RFP draft, the appointment of a marketing consultant to design a scheme with assured returns beneath NPS shouldn’t create a principal-agent relationship between PFRDA and the service supplier.

Consultant’s scope of labor

PFRDA Act mandates that the subscribers beneath NPS select a scheme that gives minimal assured returns. Such a scheme must be provided by the Pension Funds registered with the regulator.

Thus, the scope of labor for the marketing consultant can be to formulate the minimal assured return scheme to the present and potential subscribers by pension funds.

The marketing consultant must work on a sure parameter. For occasion, a assure can be capital plus further advantages or an rate of interest assure. It would apply to every contribution individually. Besides, the funds obtained by means of the change from different schemes are to be thought of as recent contributions.

Further, the assure could also be relevant solely to future contributions (prospectively). All contributions can be eligible for the assure topic to sure financial limits (with periodicity).

PFRDA’s RFP acknowledged that combos of mounted or floating charges will be labored out for MARS and each the choices beneath this parameter could also be saved open for evaluations.

Lock-in can be relevant on every contribution and utilized based mostly on the interval since that contribution. For offering flexibility, a number of lock-in interval choices (or staggered assure durations) could also be thought of and for every lock-in interval, the assure provided can be completely different. However, such choices/staggering won’t be greater than 2-3.

Withdrawals can be instantly linked to the lock-in interval. The subscriber might have the choice to withdraw or to remain invested after the lock-in interval. However, there will not be any assure utilized on the funding after lock-in. To avail of additional assure after the expiry of the lock-in interval, subscribers must once more go for recent lock-in.

The regulator mentioned that minimal and most financial limits on contributions that subscribers could make must be prescribed. Also, the contributions could also be made versatile throughout the prescribed limits.

Fees and pricing: Considering the marked-to-market valuation of scheme belongings beneath MARS, it might even be prudent to permit the Pension Funds to cost their charges as a share of the corpus managed by them. PFRDA RFP additional acknowledged that Pension Funds’ charges or pricing of assure must be charged to subscribers (viz. vary with minimal and most restrict, higher ceiling, flooring and cap).

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