Conflict of interest: PFRDA to engage consultancy for separating NPS Trust, structuring

The Pension Fund Regulatory and Development Authority (PFRDA) will engage a consultancy that will make suggestions for its organisational structuring as it seeks to segregate the NPS Trust.

In the Union Budget for 2019-20, the government had proposed to separate the NPS Trust from the pension regulator in order to address issues over conflict of interest.

Keeping in view the wider interest of the subscribers and to maintain arm's length relationship of the NPS Trust with the PFRDA, steps will be taken to separate the NPS Trust from the authority with appropriate organisational structure, Finance Minister Nirmala Sitharaman had said.

The PFRDA undertook organisational restructuring in 2017, however, the changing regulatory requirements and proposed changes in the legal framework governing the functions of the authority, it is important to re-assess the organisational structure, the pension fund regulator said while inviting Expression of Interest (EoI) for hiring a professional consultancy firm.

It is important to strengthen PFRDA's capabilities to meet the challenges in the regulatory domain, trends and preparedness to face the future challenges, it added.

"It is, in this context, PFRDA desires to engage a professional business/ strategic management consultant to study, examine and make appropriate recommendations in the areas of organisational structure, segregation of roles and responsibilities of NPS Trust, human resources and technological requirements," PFRDA said.

The consultant among others will have to identify the specific areas for studying the inter-linkages between PFRDA and NPS Trust with regard to their roles and responsibilities, it added.

The NPS Trust takes care of the assets and funds under the National Pension System (NPS) in the interest of the subscribers.

The consultant is expected to deliver a detailed report according to the objectives and scope of the study, as per terms of reference within stipulated time, PFRDA said.

It is expected that the study is complete within two months. However, in case of the contingency of major changes happening in the external environment of laws, regulations, etc., which may have the effect of altering or making irrelevant the conclusions/findings, PFRDA may consider an extension of project period, it said further.

The pension fund regulator said that formation of consortium or association of consultants and engaging of sub-consultants is not allowed, however, it reserves the right to allow the same if the circumstances require so.

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PFRDA regulates the National Pension System (NPS) and the Atal Pension Yojana (APY). NPS is subscribed by central and state government employees, autonomous bodies as well as by employees of private/corporate and unorganised sector organisations. While APY is mainly for the employees working in the unorganised sector.