The Pension Fund Regulator and Development Authority (PFRDA), has called for bids from financial institutions as Fund Managers  to manage the funds of the New Pension Scheme (NPS) for the next three years, from April 2012.

A small background – The New Pension Scheme was introduced for the Central and State Government employees w.e.f. January 2004. NPS has been introduced in all states except W.Bengal, Kerala and Tripura which were under the Left at that time. NPS, which is a contributory pension scheme replaces the earlier defined pension scheme, which was more beneficial. In the defined pension scheme, a retiree gets pension from the government, which is half amount of his last salary and will be increased through pension revision whenever there is pay revision for the regular employees. In the NPS, the employee has to contribute 10% of the salary to the Provident Fund, a similar amount will be remitted by the government and at the time of retirement, he/she will get 60% back as PF and the rest 40% will be used to pay pension. As per this scheme, there is not even an assured minimum pension of Rs, 1,000 for an employee. In a similar scheme for the Public/ private  Sector employees, introduced in 1995, Employees Pension Scheme (EPS), most of the employees are getting pension about Rs.300 or so. Very few get pension more than Rs. 1,000. The Central/State Government employees have strongly opposed the NPS and want the earlier defined pension scheme. BSNL employees, who are getting pension as per government rules are also against introduction of NPS to the new recruitees from 01-10-2000.

At present there are three Fund managers for the NPS – LIC Pension Fund, SBI Pension Fund and UTI Retirement Solutions Ltd. They are together handling a pension corpus of thousands of crores. In one month alone the subscription comes to more than Rs. 500 crore.