Pension regulator PFRDA has recently opened an on-tap licensing window for awarding licences to sponsors of pension funds. 

This is the second year in a row when Pension Fund Regulatory and Development Authority (PFRDA) has opened such a window in abid to enhance the number of pension fund managers in the country.

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The latest window, which was opened in mid-April, will be open till May 17, Supratim Bandyopadhyay, Chairman, PFRDA, confirmed to BusinessLine.

‘On tap’ window

It maybe recalled that PFRDA had last year opened an “on tap” window from July 1-31 for awarding licences to sponsors of pension funds. After this window had closed, there were some players who had approached PFRDA evincing interest to become pension fund managers, it is learnt.

There were two applications — Tata Asset Management Company and Max Life Insurance — in the last year’s window.  The PFRDA Board had approved both the applications.

The ‘on tap’ system is similar to what the RBI had allowed for new banking entrants.

In March last year, the PFRDA had based on a new Request for Proposal (RFP) for appointment of pension fund managers awarded licences to eight sponsors of pension funds including Axis Asset Management. The other seven were the pension arms of SBI, UTI, LIC, ICICI, HDFC, Aditya Birla SunLife and Kotak. All these seven were fund managers of National Pension System (NPS) in the earlier regime.

Besides throwing open the door to more pension fund managers, the RFP had introduced at least five fold jump in their fees, making it lucrative to undertake this activity.

Currently, in India more than 5.21 crore subscribers are registered under NPS and other pension schemes regulated/administered by PFRDA. The total assets under management (AUM) of the pension sector stood at ₹7.36 lakh crore as on March 31, 2022. Pension assets in India have been growing at a compounded annual growth rate (CAGR) of about 30 per cent. However, last fiscal was an aberration with growth coming in at 27 per cent, lower than expected 30 per cent, due to the volatility in global equity and debt markets caused by the ongoing Russia-Ukraine conflict.