Subscribers of National Pension System i.e. NPS are going to get a great news soon. Pension Fund Regulatory & Development Authority ie PFRDA is going to start Minimum Assured Return Scheme under NPS. PFRDA Chairman (PFRDA Chairman) has given this information in a recent interview.
There will be a danger of increasing the cost
PFRDA Chairman Deepak Mohanty said in an interview to Money Control that the pension fund regulator is working on the Minimum Assured Returns Scheme ie MARS under NPS. It can be started in the near future. However, this will also increase the cost for the subscribers of NPS. Mohanty said that due to the guarantee of minimum return, the cost of NPS will also increase.
This is why NPS is popular
Talking about NPS in recent times, the biggest reason for its liking is this low-cost structure. If the cost increases by adding a guarantee with minimum return, then it can have some adverse effect. At present, under NPS, if the asset under management is less than Rs 10,000 crore, then the pension fund manager can charge a management fee of up to 0.09 per cent of the maximum asset.
Now the cost of NPS is like this
On the other hand, if the managed assets are from Rs 10 thousand crore to Rs 50 thousand crore, the management fee can be equal to a maximum of 0.06 percent of the total assets. Similarly, if the asset under management is from Rs 50 thousand crore to Rs 1.50 lakh crore, then a charge equal to 0.05 percent of the total assets can be levied. On the other hand, if the total assets exceed Rs 1.5 lakh crore, the limit of maximum fee is equal to 0.03 percent of the assets.
It is necessary to balance these things
The PFRDA chairman is of the view that low cost pension funds are not well capitalised. The scenario may change if a guarantee is added to these. In this case additional capital will come. He said that the guaranteed returns have to be kept so attractive that they can attract the subscribers. Along with this, the cost and risk also have to be kept in mind. According to Mohanty, there will be a need to maintain a balance between risk, cost and return.
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