Mumbai:
Showing a substantial pick-up, the total assets under management(AUM) of the pension fund players – operating in the National Pension System (NPS ) and as regulated by the the Pension Fund Regulatory and Development Authority (PFRDA)- have gone up by 38 per cent to Rs 2.40 trillion in 2017-18.
In an exclusive interaction with Asia Insurance Post in Mumbai, Hemant Contractor, chairman, PFRDA, said that the subscriber base of the industry has grown by 37 per cent to 21.8 million and the new players who want to join the industry have to wait further, as the government is yet to decide how to structure the 49 pc Foreign Direct Investment (FDI) that is allowed in the pension fund industry.
However, the seven pension fund players- which had been giving an annual return of around 10 per cent in recent years,have given a slight less return at 9.9 per cent during 2017-18.
“The industry has 95 per cent of its mobilisation from the organised sector including government employees and rest are from the retail segments,’’ said Contractor.
PFRDA chief said that the regulator is planning bring out a guaranteed annuity product for the pension fund customers.
“We are still discussing about a guaranteed annuity product as there is a provision for the same in the Act. We will definitely come out with a product under this category.A guaranteed product would have lower returns than the normal product,’’ he said.
PFRDA has also solicited views on increasing the maximum current equity exposure allowed for the pension fund players from the existing 50 per cent to 75 per cent.
“Out of 50 per cent as permitted by the government, the industry has been able to do maximum 40-44 per cent,’’ added Contractor.
Though the pension fund players are allowed to invest in infrastructure investment trusts (InvITs) and Real estate investment trusts (REITs) as avenues of alternative investment, there have only two- or three investment in InvITs while there is none in REITs so far, said Contractor.
These are innovative vehicles that allow developers to monetise revenue-generating real estate and infrastructure assets, while enabling investors or unit holders to invest in these assets without actually owning them.
According to Contractor, Atal Pension Yojna(APY), a government-backed pension scheme targeted at the unorganised sector for providing pension coverage to segments to economic weaker sections such as personal maids, drivers, gardeners etc, was launched in June 2015, has almost crossed 1 crore account in 2017-18.
“We have got 16 million subscribers from the unorganised sector,.still they contribute merely two or three per cent of the total AUM,’’ said Contractor.
Contractor also informed that the government is yet to resolve the issue as how to structure the 49 pc FDI in the Indian pension industry, is yet to be resolved by the government.
There are currently seven pension fund players in the NPS, a voluntary defined contribution pension system administered and regulated by the PFRDA, created by an Act of the Parliament of India.