PFRDA nod for corporate pension fund proposal

The board of the Pension Regulatory Fund Development Authority (PFRDA) today approved the proposal to manage the pension corpus of companies.

“We have cleared it subject to certain conditions. They will have to follow the same investment and regulatory norms as are applicable to the individual subscribers,” PFRDA Chairman D Swarup told Business Standard.

The pension regulator has given its in-principle nod to the proposal and it will announce the guidelines for managing such funds in about four weeks.

Business Standard on September 22 had reported that PFRDA would take up the issue at its board meeting today.

The move came after the State Bank of India (SBI) and the Himachal Road Transport Corporation sent proposals to PFRDA to manage the pension corpus of their employees. These companies had asked only for the fund management services and not of the record-keeping agency.

Swarup said they could bypass the record-keeping but all other architecture will be the same. They will just have to pay some minor cost to the trustee bank and the custodian, which is even less than the cost of fund management. Back-end accounting and record-keeping will be done by the companies themselves.

Corpus management of companies will be a new area for PFRDA. Till now it has been managing the corpus of individuals under the New Pension System. The scheme, which was earlier restricted to government employees, was extended to all citizens in May this year.