The Department of Pension Fund Regulatory Development (PFRDA) has issued a Request for Proposal (RFP) for the appointment of consultants to assist in the design of the Minimum Guarantee Return Scheme (MARS) under the National Pension System (NPS).
The central government forced new employees to introduce NPS on January 1, 2004, and almost all state governments have since adopted NPS for their employees. NPS will be voluntarily provided to Indian citizens under the Unorganized Sector (UoS) model, Corporate Model, and Non-Resident Indian (NRI) / Overseas Citizen of India (OCI) model.
The new RFP has relaxed the eligibility criteria set earlier for a bidder and has now allowed those with experience of designing or development of atleast one scheme with guarantee for its client, to bid for the consultant role, sources close to the development said.
Former RFP
The eligibility criteria had to be tweaked as the response for the previous RFP— issued in May this year— was very tepid with only one entity showing interest, they added.
The earlier RFP mandated that a bidder, which has to be a corporate entity registered in India, should have experience of designing or development of schemes of guarantee with atleast three schemes being in operation or running in India, after being offered by its clients to the public at large. This RFP was cancelled on July 22.
MARS
The whole idea behind having MARS is to have a separate scheme that can offer a guaranteed minimum rate of return to NPS subscribers, especially those who are risk averse. Currently, the NPS gives returns annually, based on prevailing market conditions.
The appointed consultant, with requisite actuarial skills, is expected to help formulate or design a MARS that can be offered to existing and prospective subscribers by the pension funds.
The chosen consultant is also expected to set up a procedure to evaluate and approve basic scheme design modifications by the pension funds and supervise MARS. The consultant would be required to prescribe fees, solvency requirements, risk management and reporting mechanisms for pension funds in respect of MARS.
