Mumbai: New subscribers of the New Pension System (NPS) have one less pension fund manager to choose from. Reliance Capital Pension Fund Ltd has surrendered its NPS licence with effect from 10 Augus,t 2019. The company held a licence in the NPS All Citizens Model and the NPS Corporate Model.
All existing subscribers of Reliance Pension Fund are being transferred to LIC Pension Fund, unless they specifically opt for an alternative.
According to an executive from a pension fund, who did not wish to be named, this was on account of Nippon's stake in the company exceeding the 49% permissible limit for Foreign Direct Investment (FDI). Reliance Pension Fund, which was launched on 21 May, 2009, had assets of ₹103.52 crore as of 30 June, 2019.
“Nippon Life insurance is in the process of acquiring 75% stake in Reliance Nippon Asset Management (RNAM) and PFRDA (Pension Fund Regulatory and Development Authority) guidelines on FDI don’t allow the sponsor company to breach the 49% limit. Hence, Reliance Capital Pension Fund Ltd has voluntarily offered back the licence and will cease to act as pension fund manager from 9 August 2019," said a spokesperson from Reliance Nippon Asset Management Ltd.
After the exit of Reliance Pension Fund, NPS will have seven pension fund managers in total. A Mint analysis of the performance of various pension funds shows HDFC Pension Fund to be the top performer. Subscribers can change their choice of pension fund manager once a year, without attracting any exit load or tax. The recent Union budget increased the incentives for investing in NPS by hiking the tax-free withdrawal amount when a subscriber attains the age of 60 from 40% to 60%.