NPS Throws Great Opportunity for Insurance Providers: PFRDA

The pension Fund Regulatory and Authority (PFRDA) concerned that despite the National Pension System (NPS) throwing great opportunity to life insurers, there are not enough players in the system to take advantage of this.

Despite the huge opportunity, life insurers are not entering this NPS segment, as 85% of total market in annuity plan are with LIC and 10% with SBI life insurance and the remaining are shared among other insurers. The pension fund regulatory said that, the new NPS provision mandates 40% of total corpus towards annuity schemes of life insurers and there by these companies will have large customer base.

According to new NPS guidelines, the pension fund regulator can increase the number of fund managers from 6 to an unrestricted number with any financial institution that has eligible fund managers. The regulator can also increase the commission from the present 0.0009% per Rs.10 lakh to an amount which is yet to be finalized. The pension fund regulator said that, though there may be increase in charges for fund managers, but it will be still minimal compared to what insurers and mutual fund charge.

While talking about revised NPS guidelines, the pension fund regulator would focus on popularizing the scheme among private employees and the general public. At present, the total corpus of around Rs.18,000 crore is contributed by public sector employees. So, to make it popular among private employees, NPS has to come up with revised guidelines.

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