The Pension Fund Regulatory and Development Authority (PFRDA), the regulator of the National Pension System (NPS), has doubled the minimum net worth criterion for pension fund managers to 50 crore from the 25 crore stipulated earlier. Existing pension fund managers must comply with this requirement within such time as the PFRDA stipulates. This brings pension funds on par with mutual funds which have to meet a minimum net worth requirement of 50 crores, under SEBI rules.

"The amended pension guidelines pave the way for rediscovery of charges which will help the pension sector to grow. PFRDA should get that actioned quickly. All existing players will comply with the new guidelines in due course of time," said Sumit Shukla, CEO, HDFC Pension Fund. At present pension fund manager charges are capped at just 0.01% of the pension fund corpus, a small fraction of mutual fund expense ratios which can go up to 2.25%.

The PFRDA notification, which was published in the Official Gazette on 4 February, also made provision for licenses to have indefinite validity. In other words, licenses of pension fund managers will remain valid until cancelled by the regulator. These were previously granted for a period of five years.

The PFRDA notification further laid down that a pension fund or its sponsor cannot acquire equity stake in another pension fund. Existing pension funds who have such cross holdings can continue with the same but cannot increase them without the permission of the regulator. The PFRDA notification in one of several proposed steps, including amendments to the PFRDA Act to reform the NPS. You can read about the other PFRDA proposals here.

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