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Informist, Wednesday, Oct. 8, 2025

 

--PFRDA head: Low distribution cost has not helped pension pdt sales
--CONTEXT: PFRDA Chairperson Ramann speaking at Global Fintech Fest

 

MUMBAI – There is an urgent need to drive the distribution network to boost the reach of pension products across the country, Pension Fund Regulatory and Development Authority Chairperson Sivasubramanian Ramann said Wednesday. He said the conservative distribution commission on pension products has not helped the penetration as the fee on other financial products like mutual fund is considerably higher.

 

"We have been very conservative, but it hasn't helped us purely from the fact that the number of non-government customers in National Pension System is just a crore (10 million). Now, that's really where I'm saying we have to do our job and get the entire distribution network to work out," Ramann said at Global Fintech Fest.

 

"We did not allow for enough distribution commission to come in. Even after having given a more relaxed distribution commission, if I were to simply take a blunt comparison between a direct scheme in mutual fund and a distribution-based scheme in NPS, it is still at half the cost," he said.

 

Currently, charges for opening a NPS account is around INR 40. While maximum investment management fee charged by pension funds depends on the total asset under management held by them. It ranges from 0.03% to 0.09% of the contribution.

 

Ramann said fintech companies can open new avenues for the pension sector as they have large database of potential pension seekers. "We are talking to a variety of people who have got crores of customers already with them in the variety of other financial products that they have. The third-party service providers have got a great database with them. Now, how to quickly bring those people into NPS without any kind of problems of know your customer, I think that's one of the biggest challenges we've got," he said.

 

He, however, cautioned that it is very important for pension funds to not look like mutual funds. "The pension fund intrinsically is not allowing you to take your money out. We are working on that liquidity, it's important that people can access their money at particular points of time."

 

Pension funds are also keen to bring platform workers under National Pension System architecture. "The Uber, the Urban Company, the number of people who are attached to services through a digital platform, that really comes under platform worker. This is a great way to move forward because they are informal workers. We would be delighted for the pension funds to take this forward and cover," Ramann said.

 

The pension sector regulator is also working on providing alternatives to annuity for subscribers. "We heard a lot from the entire NPS community that forced annuity, which today is 40% annuity at a minimum, is something which is really not seen as favourable by the customers," Ramann said.

 

"We have come out with a paper which talks about different models. One of them is actually saying that we need an inflation-indexed payment system," he added.  End

 

Reported by Sagar Sen

Edited by Akul Nishant Akhoury

 

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