Individuals can now sell pension products: PFRDA chairman

To increase the penetration of the National Pension System (NPS), especially in tier-I tier-II cities to reach out to all segments, the Pension Fund Regulatory Development Authority of India (PFRDA), has now allowed individuals, including NPS subscribers, to become distributors of pension products.

The regulator had earlier allowed banks point of presence-service providers (POP-SPs) to work as pension product distributors. As part of the latest move, POP-SPs will empanel individuals seeking to become pension product distributors as per PFRDA guidelines. “Direct licensing will not be provided to these individual advisers by PFRDA. It will be given to them under POP-SP regulations, PFRDA chairman Supratim Bandyopadhyay told Mint. “PFRDA will provide broad guidelines to POP-SPs who wish to take individuals with them (as a pension adviser) allow these individuals to walk in the field procure pension products.”

Bandyopadhyay also clarified that the process to get pension products distributed or sold by individual advisers is left to the discretion of POP-SPs. POP-SPs are free to decide on whether to empanel individuals to sell pension products.

Also, similar to the mutual fund insurance industries, there is no cap on empanelling individual advisers under a POP-SP.

The selection of individuals will be made on specific grounds. “PFRDA will give broad guidelines on the selection process to POP-SPs. To get them empanelled, changes have been made in POP-SP regulations,” said Bandyopadhyay.

Bandyopadhyay further said that PFRDA is still taking suggestions from POP-SPs (which have tie-ups with other insurance companies) to decide on how individual advisers can get their commissions paid.

Additionally, steps have been taken to prevent the misselling of pension products.

“Like in the case of the insurance industry, the proliferation of products can give rise to misselling. Fortunately, we have only two products (NPS Atal Pension Yojana). So, by giving proper training to these individual advisers, who get empanelled under POP-SPs, we can curb misselling. Since NPS is a market-linked product, subscribers need to get proper guidance from advisers. Advisers should tell subscribers that they shouldn’t rely on the past performance of funds.”

For an act of omission, negligence, the POP-SPs will be held responsible, just as in case an insurance agent makes any inadvertence, the insurance company is liable for that act. Similar principles will apply when it comes to the distribution of pension products by individual advisers via POP-SPs, said Bandyopadhyay.

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