NEW DELHI: Pension Fund Regulatory and Growth Authority (PFRDA) has issued the request for proposal (RFP) for the appointment of a marketing consultant to assist in design a Minimal Assured Return Scheme (MARS) beneath the Nationwide Pension System (NPS).
The central authorities had launched NPS mandatorily for its new staff from 1 January 2004, and subsequently, nearly all of the state governments have adopted NPS for his or her staff. NPS can also be provided voluntarily to residents of India beneath the Unorganized Sector (UoS) Mannequin, Company Mannequin, and Non-Resident Indian (NRI)/Abroad Citizen of India (OCI) Mannequin.
In line with the PFRDA RFP draft, the appointment of a marketing consultant to design a scheme with assured returns beneath NPS mustn’t create a principal-agent relationship between PFRDA and the service supplier.
Advisor’s scope of labor
PFRDA Act mandates that the subscribers beneath NPS select a scheme that gives minimal assured returns. Such a scheme must be provided by the Pension Funds registered with the regulator.
Thus, the scope of labor for the marketing consultant can be to formulate the minimal assured return scheme to the present and potential subscribers by pension funds.
The marketing consultant should work on a sure parameter. As an illustration, a assure can be capital plus further advantages or a rate of interest assure. It could apply to every contribution individually. Apart from, the funds obtained by means of the change from different schemes are to be thought about as recent contributions.
Additionally, the assure could also be relevant solely to future contributions (prospectively). All contributions will likely be eligible for the assure topic to sure financial limits (with periodicity).
PFRDA’s RFP said that mixtures of fastened or floating charges will be labored out for MARS and each of the choices beneath this parameter could also be saved open for evaluations.
Lock-in can be relevant on every contribution and utilized based mostly on the interval since that contribution. For offering flexibility, a number of lock-in interval choices (or staggered assure intervals) could also be thought about and for every lock-in interval, the assure provided can be completely different. Nevertheless, such choices/staggering won’t be greater than 2-3.
Withdrawals can be straight-linked to the lock-in interval. The subscriber could have the choice to withdraw or to remain invested after the lock-in interval. Nevertheless, there will not be any assure utilized on the funding after lock-in. To avail of additional assure after the expiry of the lock-in interval, subscribers should once more go for the recent lock-in.
The regulator mentioned that minimal and most financial limits on contributions that subscribers could make should be prescribed. Additionally, the contributions could also be made versatile inside the prescribed limits.
Charges and pricing: Contemplating the marked-to-market valuation of scheme property beneath MARS, it could even be prudent to permit the Pension Funds to cost their charges as a share of the corpus managed by them. PFRDA RFP additional said that Pension Funds’ charges or pricing of assuring should be charged to subscribers (viz. vary with minimal and most restrict, higher ceiling, flooring, and cap).