Insurance provider, Max Life Insurance has received the license for Pension Fund Management (PFM) and is expected to start operations soon. It is one of three new firms, including Axis Asset Management Company and Tata Asset Management Company, that have obtained such licenses in the past one year. The company also has Point of Presence (NPS Distribution) and annuity providing licenses. Max Life Insurance CEO Prashant Tripathi spoke to Mint about the company’s plans for its pension fund business. Expert edited from an interview:
What is your broad strategy for NPS?
We have seen growth in NPS assets under management at a CAGR of 37% over the last five years, which is quite strong. Gradually, NPS is becoming more and more prominent in the overall retirement fund market.
As a life insurance company, Max India already offers retirement solutions such as immediate or deferred annuities. However, it makes sense for us to look at retirement as a market in a 360-degree way.
And with that belief, we have taken the license from Pension Fund Regulator, PFRDA to start Max Life Pension Fund Management, a 100% subsidiary of Max Life Insurance.
In addition, we also have a license to be an Annuity Service Provider or ASP. As an organization, we can also provide annuity for other pension funds.
Axis Bank has historically distributed Max Life products and is now your promoter as well. At the same time, Axis Mutual Fund has also acquired the pension fund license. So, how does this affect your distribution?
I think both the teams will work together and there will definitely be synergy. His plan to start a PFM business and our plan came at two different times.
They applied for the license even before we became our parent organization, and we want to run it in parallel. The market is big. We are already in talks with the Axis Bank team and we will fully build synergies.
Are there any improvements you would like to see, especially in NPS? For example, more flexibility with investing, moving to small cap – is this something that you think needs to happen in the next year or two?
Yes definitely. Given fewer credit bonds, taking on more risk, and looking at alternative asset classes would certainly be a possibility, but these things would happen as the business matures. I am already very happy with the current level of flexibility and for a new organization like ours, this is enough to get started. But as time goes by, I feel that making distribution more attractive, building ecosystem and framework for rapid growth around distribution, easier panel of customers is needed. Those are things where we’ll definitely be working with the regulator to see how that can be accelerated.
How much do you intend to invest in this new venture? And, when are you likely to start operations?
it is basically needed 50 crores. we have kept about 55 crores to start with, and we believe it is not going to be a very capital-intensive business and will be like any other entrepreneurial venture.
We’re going to follow a bootstrap method and then see how fast it grows. But our company is huge, and there will be no shortage of capital if the business starts to grow.
As far as starting our operations is concerned, we are almost there. My understanding is, the beginning of the second quarter is when we should be able to start our operations.
So, we have licenses. We have got all the approvals from the management. And, we’re just going to start.