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Guaranteed-return product under NPS likely by year-end, says PFRDA

The regulator’s chairman, Supratim Bandyopadhyay, said talks had already taken place last year on the guaranteed minimum return product.

NPS is a market-linked insurance product and has generated returns close to 10% over the past ten years.

Speaking at a press conference, Bandyopadhyay said that whatever guaranteed products were present in the insurance industry, they were slowly being phased out as it was believed that they were not feasible for a long time for the insurance industry. organizations. Even the market regulator Sebi does not promote any guaranteed products.

“It’s part of our law (to offer a guaranteed product), we have to do it. As soon as you give a guaranteed product, the capital requirement for fund managers increases. Currently, what we do (c ‘is) that the product is absolutely marked-to-market, so we don’t take any investment risk on ourselves,” he said.

He also said the regulator will form a committee very soon. “We will formulate a product during this fiscal year and deliver it to the board. Maybe in the next six months you may see that a product is ready, but throw me, take time” , he added.

Bandyopadhyay also said that there will be a different fee/fee structure for the guaranteed product and that there must be a separate guarantee fee to be charged by the fund managers, at the time of asking for a guarantee.

“So those are all factors that we have to decide, we have to see what the ideal fees should be for fund managers to manage their costs,” he said.

In addition, the regulator is considering a universal pension scheme.

“We have already made a presentation (to the Ministry of Finance) on universal pension and automatic enrollment. What we are trying to do is get a lot of people covered by the pension, which is not happening. not produced today, especially in small businesses and unorganized groups where there are less than 20 people.

“So we are seeing if we can bring them under the NPS or APY (Atal Pension Yojana) umbrella,” Bandyopadhyay said.

On the returns the NPS can generate in the current fiscal year, the head of the PFRDA said that so far, equity returns have been declining due to the pandemic.

“It’s almost 40% less than in January or early February, even if the market recovered afterwards, in the current year the return could be less,” he added. .

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