People in this modern world have become more concerned about their future which in turn has made them to plan about pension after their retirement. Now pension products have been one of the essential constituents in everyone’s life. All New Pension Schemes (NPS) will be implemented only after the NPS is authorized by Pension Fund Regulatory and Development Authority (PFRDA). Fund houses have been invited for the bids and 21 companies have been showing much interest in managing the corpus.

The PFRDA bill is expected to be considered in the next year’s budget session in our parliament. But this PFRDA has been authorized to work on the employees working in the private sectors through an execution order. Here fund managers will be requested to sign contracts. These contracts are enforceable under the Indian Contracts act.  After the bill has been passed in the parliament, PFRDA will gain the right to punish the fund houses which commits some undesirable mistakes. If PFRDA is successfully implemented then it can serve up to 8 crores people mainly concentrating on the self employed individuals and unorganized sectors.

The structure of this organization is in such a way that there will no marketing overheads and selling agents. It will have country wide network of Point Of Presence (POP) centers. The centers will have post offices, banks and other existing channels. Fund managers will be provided with the contributions given by the subscribers. The POP acts as a mediator between subscribers and fund managers.

The organization is coming up with 4-5 plans for an individual. Fixes income and equity instruments will be exposed by the NPS. Every investor will be provided with various options in the NPS. The investments are made as index funds (BSE or NSE) and not as individual stock picking. Balances, growth, gilt and safe are the schemes available under NPS.

The bidding process of PFRDA has eventually cultivated keen interest on 21 firms. Their applications are being evaluated based on the technical suitability by PFRDA and shortlisted list of 5-6 firms will be announced by February. The charges for the subscribers are very similar to the LIC pension fund, SBI pension and UTI pension fund. The fee ranges from 0.03% to 0.05%.

The charges for this plan is very less when compared to insurance industry and mutual fund. The main advantage of this scheme that fund schemes and fund managers can be changed at any time under nominal transaction charges. Only minimum annual deposit is to be paid by the subscriber. PFRDA is planning to campaign about the importance of retirement plans so that people get awareness about importance of pension plans.

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