Assured returns on pension plans being discussed with other regulators: PFRDA chief

Pension Fund Regulatory and Development Authority (PFRDA) is looking at multiple options to offer minimum assured returns to market-linked plans and is now engaged in discussions with other regulators to resolve this issue. In an exclusive interaction with Moneycontrol, Hemant Contractor, Chairman, PFRDA also talks about growth figures of FY17. Edited excerpts:

You had proposed minimum assured returns for market-linked plans. However, are other regulators enthused with this idea?

We are discussing it with the other regulators. There have been some issues that they have raised.

Our pension funds are sponsored by entities which are regulated by other regulators. If you offer a product like minimum assured returns, the sponsors will have to set aside more capital. If they have to raise more capital, it has implications for everybody.

Will you then be doing away with this plan?

It is not a closed issue at all. We are also looking at other ways of providing minimum assured returns. There are multiple options we are exploring.

Have the new pension fund managers started off operations?

While we have completed the bidding process and finalised the names, they have not yet been operational. While once that happens, it will not have a direct bearing on the assets under management (AUM); their commission rates will be different. This is because there has been a change in the structure of the bidding process.

What was the growth in the AUMs of the National Pension Scheme (NPS) in FY17?

The size of the business in FY17 was at Rs 1.78 lakh crore, which has seen a growth of 46 percent over the previous year.

Even for the corporate subscriber segment, the scheme did very well. It has also grown though there is a base effect. The number of subscribers almost doubled and we expect it to grow even more in this fiscal year.

We saw more than 10-11 lakh non-government subscribers (1 million-1.1 million) in FY17. It was only 4-5 lakh (0.4 million-0.5 million) in FY16.

PFRDA had planned to imcrease the equity exposure for NPS. Has a decision been taken on this?

We have been discussing it with the government and are hopeful that something will come up.