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Sumit Mohindra of ICICI Prudential Pension Funds on why NPS returns are better than those on mutual funds

The long-term nature of NPS plays an extremely critical role in generating better returns

December 09, 2021 / 01:12 PM IST
PC- Shutterstock

PC- Shutterstock

It’s been a year of major changes in the National Pension System (NPS). The product has also seen expansion in subscriber base as well as assets under management. As per Pension Funds Regulatory and Development of Authority of India (PFRDA) data, the non-government sector subscriber base rose 2.4 lakh in the financial year 2021-22 up to August. During the same period last year, the system had seen addition of 1.6 lakh new subscribers.

One among the seven NPS fund managers, ICICI Prudential Pension Funds Management Company, expects inflows into its NPS schemes to double by next year. The company’s CEO Sumit Mohindra joined Moneycontrol’s Preeti Kulkarni on Simply Save podcast to share his views on the NPS changes and outlook for the space in the months to come.

On increase in NPS investment charges

Mohindra feels that the earlier charge structure – when the fund management charge was one basis point – was not sustainable. “The changes made by the regulator (increasing the charges to a maximum of nine basis points) are welcome. The previous fee structure was not sustainable. The current one allows us to put in more resources for the development of this sector and increase the outreach,” he says. Yet, the charges remain low. However, Mohindra says he is satisfied with the quantum of hike. “It is an increase of nearly 6-9 bps. This is a significant improvement,” he adds.