NPS throws great opportunity for insurers: PFRDA
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NPS throws great opportunity for insurers: PFRDA

Last Updated: Monday, August 06, 2012, 23:04
 
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NPS throws great opportunity for insurers: PFRDA
Mumbai: Despite the National Pension System (NPS) throwing up a large opportunity to life insurers, there are not enough players in the system to take advantage of this, the pension fund regulator PFRDA Monday said.

"The minimum 40 percent contribution under the NPS towards annuity is a great opportunity for life insurance players, as they can get captive customers from this system. But we don't have enough players in this arena," PFRDA Chairman Yogesh Agarwal said while addressing a CII summit on insurance here.

"While 85 percent of the total market in annuity plan are with Life Insurance Corporation of India (LIC), around 10 percent are with SBI Life Insurance and the remaining are shared among the rest of the players," he said, adding despite the huge opportunity, life insurers are not entering this segment.

The new NPS provisions make its mandatory contribution of 40 percent of the total corpus towards annuity schemes of life insurers, which gives a large captive customer base to these companies, the regulator said.

According to the NPS provisions, an investor can withdraw 60 percent of his total corpus, which he has saved during his working life and the rest will go to an annuity plan of a life insurer.

Talking about the revised NPS guidelines, he said the endeavour is to popularise the scheme among private employees and the general public.

Total corpus of NPS is around Rs 18,000 crore, majority of which is contributed by the public sector employees. To make it popular among private investors, the NPS has come up with revised guidelines, he said.

The new NPS guidelines allow the Pension Fund Regulatory and Development Authority to increase the number of fund managers from the present six to an unrestricted number with any financial institution that fits the eligibility criteria to be a fund manager.

It also lets the regulator allow fund managers to increase their commission from the present dismal 0.0009 percent per Rs 10 lakh to an amount which is yet to be finalised by the regulator.

"Though there will be some rise in charges for fund managers, it will still be very minimal in comparison to what insurers and mutual funds charge," he said.

PTI


First Published: Monday, August 06, 2012, 23:04


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