More post offices and Banks to offer the New Pension Scheme (NPS)

    vestors will soon have more outlets, including post offices, to invest in the
new pension system (NPS). Unhappy with the existing distributors, the pension
fund regulator has signed up eight more service providers to extend the reach of
the scheme. The scheme was thrown open to all individuals in May last year, but
has so far managed to sign up only about 3,000 subscribers. Pension Fund
Regulatory and Development Authority (PFRDA) sees the distribution or the point
of presence (PoP) as the weak link.

    Department of posts, Bank of India, ICICI Securities, Muthoot Finance, Syndicate
Bank, UTI Technology Services Ltd, Yes Bank and Karur Vysya Bank have now joined
the NPS as PoPs. They are expected to add another 2,000 branches to the
880-branch network, where subscribers can open and operate their NPS "We have
just signed an agreement with these PoPs but they will be operational in another
two to three months," a senior PFRDA official said.

    With IT connectivity a pre-requisite for handling NPS customers, the new points
of presence require some time for identifying branches that can function as
service providers for the scheme. They are also integrating their systems with
that of National Securities Depository Ltd — the record-keeping agency of the
NPS, the official explained.

    The NPS was initially open to central government employees who joined service
after 1 April, 2004. It was subsequently extended to private individuals in May
2009.

The biggest attraction of the scheme is the low fund management fee it charges —
0.009% against nearly 2.25% charged by mutual funds. It charges a fixed annual
account maintenance fee of Rs 350 and an additional Rs 20 per transaction. The
scheme has three plans with different exposure to equities.


    In the first eight months of its operations, the scheme is giving 10-12 %
returns , depending on the plan chosen by the subscriber.

SOURCE - ECONOMIC TIMES