NPS charges to go up after fresh bids

NEW DELHI: Investors in the National Pension System ( NPS) will be charged more for fund management but experts say the overall costs of the scheme are still quite low.Bids received from the nine pension fund managers range from 0.07% (`70 per `1 lakh) to 0.1% (`100 per `1 lakh)

The bids were opened by the Pension Fund Regulatory and Development Authority (PFRDA) on Wednesday .

Till now, investors were being charged only 0.01% (`10 per `1 lakh) because all pension funds had to match the lowest bid by Reliance Capital Pension Fund in the previous round of bidding in April 2014.

In the fresh bids invited by the Pension Fund Regulatory and Development Authority (PFRDA), the regulator had not made it mandatory for pension funds to match the lowest bid. However, it had also lowered the cap on charges from 0.25% to 0.1%. Only two of the nine pension funds have hit the ceiling.

“The hike in the fund management charges should not be a deal breaker for investors in the NPS,“ says Manoj Nagpal, CEO of Outlook Asia Capital. Nagpal points out that the hike in charges will have a marginal impact on the overall cost for the investor.