Informist, Thursday, Feb. 20, 2025

--Sources: Pension fund managers may meet PFRDA on Tue for quarterly review

--Fund managers may seek PFRDA clarity on unified pension corpus mgmt

--CONTEXT: Unified Pension Scheme will come into effect from Apr 1

By Christina Titus, Priyasmita Dutta and Kshipra Petkar

MUMBAI/NEW DELHI – Pension Fund Regulatory and Development Authority will likely meet pension fund managers for a quarterly review on Tuesday, officials aware of the matter told Informist. In the meeting, pension fund managers may also seek clarity from the regulator on the management of funds under the Unified Pension Scheme, which will be implemented from Apr. 1.

"They (PFRDA) have said that we will give the option to the employees to choose their fund manager but we as private fund managers are not clear whether the employees will be able to choose the private fund manager or not, so we will ask for clarification," a senior official at a private pension fund said. PFRDA had sought comments from market participants on the newly rolled out scheme for government employees by Feb. 17.

Of the eleven pension funds registered with the PFRDA, three are public and the rest are private pension funds. Ambiguity prevails over who is managing the funds under the National Pension System because, when it was launched, it was managed by three public pension funds – LIC Pension Fund Ltd., SBI Pension Funds Pvt. Ltd. and UTI Pension Fund Ltd. Later on, private pension funds were involved in managing the funds of the National Pension System.

Out of the total assets under management of INR 13.89 trillion, which includes Atal Pension Scheme and National Pension System, 2.7 million central government employees have a pension corpus of INR 3.71 trillion as on Jan. 31 according to the NPS Trust website.

The guidelines for Unified Pension Scheme, which were detailed on Jan. 25, aim to provide an assured pension, family pension, and an assured minimum pension for government employees. To address the demand for assured returns, the Cabinet decided to roll out this scheme, in which 50% of the average basic pay drawn in the last 12 months prior to superannuation for a minimum qualifying service of 25 years would be given as an assured pension. For those with less than 25 years but over 10 years of service, the assured sum would be a proportionate sum calculated on a pro-rata basis.

The scheme also assures family pension, under which 60% of the pension will be given to the immediate family after the demise of an employee. The third feature is an assured minimum pension, which is devised to address the issue of employees with government service for at least 10 years. Under this, INR 10,000 will be given to such employees as a minimum assured pension.

While employees' contribution to the Unified Pension Scheme will continue to be at 10%, the Centre's contribution will be raised to 18.5% from 14.0%. There is a provision that will allow the Centre to re-evaluate its contribution once every three years, but there is no opportunity to tweak the staff's contributions. Central government employees will be given the option to choose between the National Pension System and the Unified Pension Scheme. They will get the option to switch from the National Pension System to the Unified Pension Scheme or vice versa only once. End

Edited by Ashish Shirke

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