PFRDA has just initiated a competitive bidding process for selection of the PFMs seeking those agreeing to levy the lowest fund management fee. The existing eight PFMs will have to re-bid to retain their their mandate.
The request for proposal for selection of PFMs has already been called and the last date for receiving the bids is 14 February. After the technical and commercial bids , the letters of intent will be issued to short listed PFMs on 4th March.
The three existing PFMs for the NPS of government employees are required to submit commercial bids only,while others will have to submit both technical and commercial bids.
PFRDA has over the years registered 8 PFMs promoted by LIC, SBI, UTI AMC, ICICI, HDFC, Kotak Mahindra, Reliance Capital, and DSP Blackrock for managing the funds of private sector NPS. Three PFMs promoted by PSU financial -LIC, SBI, and UTI AMC manage the NPS corpus of government employees.
The regulator now wants to select PFMs through a transparent and competitive bidding process based on who quotes the minimum management fees.
NPS was initiated by the government in 2004 as part of the reform to switch over to a defined contribution scheme from the earlier defined benefit scheme to reduce the future pension liability. Central government employees recruited since 2004 were mandatorily offered NPS.
source–the financial express new Delhi p.19, 29 January 2014