Pension regulator Pension Fund Regulatory & Development Authority’s (PFRDA) Board will by this month end give its approval for the Minimum Assured Return Scheme (MARS) under the National Pension System (NPS) its Chairman Supratim Bandyopadhyay said.

MARS is expected to give 4-5 per cent assured annual return on the corpus for ten years. The whole idea is to have a separate scheme that can offer a guaranteed minimum rate of return to NPS subscribers, especially those who are risk averse.

 Currently, the NPS gives returns annually, based on prevailing market conditions.

It maybe recalled that PFRDA had appointed EY Actuarial Services LLP as a consultant to help design a MARS under the NPS.

“MARS has been taken to the Board. Board approval should come by month end. But it will take time thereafter as systems development are required. This is a new product altogether”, Bandyopadhyay told businessline, when asked about its status. 

To go live by April

Post the approval, the product would be given to Pension fund managers and central recording keeping agencies (CRA) to develop systems. 

By April 2023, one can expect to see MARS going live, according to PFRDA Chief. PFRDA had earlier indicated that MARS would get launched in the market in September 2022.

“We were looking at it for September. There were many rounds of discussion including pension fund managers. If they (pension fund managers) are not internally convinced, then it will be a difficult task. It is not good for a regulatory body to put pressure on them to do on this lines. It is always good to keep everybody on board. I am confident that early part of 2023-24 we will see the product in the market”, he added.

Indications are that the upper age for subscribers to MARS would be below 50 years, keeping in mind the retirement age of 60 years. Also MARS is likely to come at a fund management fee higher (say around 25 basis points) than maximum fee of 9 basis points fixed for NPS.

To enable pension funds and its sponsors to offer MARS-like products, PFRDA has already tweaked the capital requirement norms for the sponsors and stipulated higher networth and paid up capital for those looking to set up pension funds in the country.

India’s pension assets under management is expected to touch  ₹ 9 lakh crore mark by end March this fiscal, a 22 per cent jump over the level of ₹ 7.37 lakh crore as of end March 2022. PFRDA is aiming for an AUM (assets under management) of ₹30-lakh crore by 2030.

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