Selection of Intermediaries                    (Click here for Hindi)

 Pending passage of the Pension Fund Regulatory and Development Authority (PFRDA) Bill in Parliament, a conference of Chief Ministers of the various State Governments was organized by the Ministry of Finance, Government of India in January 2007 on the National Pension System (NPS). As part of the action taken on the decisions taken at the conference, the Government of India has advised PFRDA to appoint, from the public sector, a Central Recordkeeping Agency and Fund Managers to manage the pension funds of employees of the Central Government and autonomous bodies covered by the NPS. Later, the system developed by the selected CRA and pension funds is expected to be offered to the State/Union Territory Governments for their use and for use by the autonomous bodies under such governments covered by the NPS.

Selection of Record-keeping Agency (CRA)

PFRDA issued an advertisement (22nd January 2007) inviting Expression of Interest (EoI) from public sector entities with experience of developing and managing technology based central administration and recordkeeping systems, for functioning as CRA responsible for opening and maintenance of personal retirement accounts of the subscribers under the NPS and providing a number of related services.

Public sector entities with at least 5 years in central recordkeeping and administration functions, minimum positive net worth of Rs.50 crore (Rupees Fifty crore) and experience in managing over five lakh individual accounts per year over the last three years were eligible to submit expression of interest.

In response to the advertisement, PFRDA received EoIs from the following six entitles

·         Life Insurance Corporation of India

·         National Securities Depository Limited

·         Stock Holding Corporation of India Limited

·         Union Bank of India

·         UTI Technology Services Limited

·         Writer Information

The EoIs submitted by all the six entities were scrutinized in the light of eligibility criteria prescribed by the PFRDA and Request for Proposal (RFP) documents, inviting detailed technical and commercial proposal, were issued to the following four entities which satisfied the eligibility conditions:

·         Life Insurance Corporation of India

·         National Securities Depository Limited

·         Stock Holding Corporation of India Limited

·         UTI Technology Services Limited

Out of these four entities only three entities submitted their technical and commercial proposal to PFRDA in accordance with the requirements detailed in the RFP documents. Life Insurance Corporation did not submit any proposal.

 An evaluation committee was constituted to evaluate the technical and commercial proposals and to recommend to PFRDA the most suitable entity to function as CRA. The committee recommended National Securities Depository Limited as the most suitable entity to function as CRA based on the requirements specified in the RFP document. PFRDA accepted the report of the committee and has selected the National Securities Depository Limited as CRA. Contract negotiations are underway and NSDL is expected to be appointed as the CRA in respect of Government employees under the NPS, shortly.

Selection of sponsors of Fund Managers

PFRDA issued an advertisement and Preliminary Information Memorandum (PIM) inviting Expressions of Interest (EOI) from public sector entities for sponsoring Pension Funds for Government employees under the National Pension System. To be eligible, the sponsors were, inter alia, required to have at least 5 years experience of fund management, with average assets under management of not less than Rs. 10,000 crore for the month of March 2007.

The last date for submission of Expression of Interest (EoI) was 25th May 2007. In response, Expressions of Interest were received from seven public sector entities namely, Canara Bank, IDBI Capital Market Services Limited, Life Insurance Corporation of India, State Bank of India , UTI Asset Management Company Private Limited, Securities Trading Corporation of India Limited and Punjab National Bank.

Four out of these seven entities met the requirements of eligibility as laid out in the PIM and were invited for issuance of Request for Proposal (RFP) for sponsoring Pension Funds under the NPS. The four entities to which the Request for Proposal (RFP) was issued on 11th June 2007 are, IDBI Capital Market Services Limited, Life Insurance Corporation of India, State Bank of India and UTI Asset Management Company Private Limited.

Their proposals, including the technical and commercial bids, were received in PFRDA by the deadline of 4th July 2007. An independent Selection Committee was constituted by PFRDA and entrusted with the responsibility of evaluation of the proposals received from the eligible entities, and to short-list the three best value bidders in terms of requirements (technical & commercial) of RFP.

Based on the overall evaluation, including technical and commercial parameters, the Committee found (i) State Bank India, (ii) UTI Asset Management Company Private Limited and (iii) Life Insurance Corporation of India as the three best value bidders, and recommended their appointment as sponsors of Pension Funds under the National Pension System.

Contract agreements with the selected sponsors are expected to be signed shortly, authorizing them to incorporate separate companies as pension funds for managing the corpus under the NPS.