PFRDA uses a supply-side hammer on a demand-side issue
As India’s various regulators meander their way through understanding what their role is, the need for a crash course in regulatory basics looks more important by the day. Registration of Pension Funds for Private Sector Guidelines announced on 12 July by Pension Fund Regulatory and Development Authority (PFRDA), have changed the basic structure of the National Pension System (NPS). A committee headed by G.N. Bajpai, former chairman of Securities and Exchange Board of India, had suggested changes in NPS aimed at increasing coverage. The first of these changes was implemented early this year with the sales charge changed to 0.25% of the invested amount, with minimum and maximum caps at ₹ 20 and ₹ 25,000, respectively. While it is still early days to say if this had any change in the number of investors buying into the product, PFRDA has gone ahead and implemented the rest of the report. This changes the investor-friendly and unique nature of NPS and has made it just like another collective investment scheme that will now compete with mutual funds and unit-linked insurance plans.