Pension funds: UTI arm leads six-pack
The PFRDA announced the list of six pension fund managers (out of 12) that will manage the retirement funds of citizens outside the government sector.business Updated: Feb 09, 2009 20:52 IST
The Pension Funds Regulatory and Development Authority (PFRDA) on Monday announced the list of six pension fund managers (out of 12) that will manage the retirement funds of citizens outside the government sector. The regulator also shortlisted 23 institutions (out of 32) as points of presence (POP) — firms that will distribute these products.
All the six players will manage the funds at a charge of 0.0009 per cent of total assets under management. In the competitive process to determine the fund managers, UTI Retirement Solutions emerged as the lowest-cost bidder. The other five will have to match the price.
At this price, a fund manager will make Rs 9 lakh for managing assets worth Rs 1,000 crore. In comparison, a mutual fund makes Rs 22.5 crore on the same amount.
"We are not in the business for one or two years," said U.K. Sinha, chairman and managing director, UTI, defending the low price. "We are here to stay and are looking at this business over the long term." "The idea was to ensure that we are able to reach the remotest parts of the country," PFRDA chairman D Swarup, told Hindustan Times.
The minimum annual subscription to this scheme is likely to be Rs 6,000, which will have to be deposited at least in four installments, a senior PFRDA official said. However, this will increase the cost for the subscriber. Every time a transaction is made the POP will get Rs 20. In a scheme with such a sharp focus on low costs, this rule seems out of synch.
First Published: Feb 09, 2009 20:49 IST