DSP Pensions to expand into NPS distribution, plans to apply for PoP license

DSP Pensions, a recent newcomer to the pension fund management industry, plans to diversify into NPS distribution and will apply for a Point of Presence (PoP) license with the regulator by the end of this year, its Chief Executive Officer, Rahul Bhagat has said.

“We are in the process. We are geared up to apply. It will be done in the near future. We are going for the licence before this year end”, Bhagat told BusinessLine when asked about plans to be a PoP for NPS. 

A PoP is the first point of contact for National Pension System (NPS) account holders in the NPS architecture. 

Bhagat said that he was very positive about the pensions industry and had big plans to place DSP as a significant player in this space, and not just as the 11th player. 

“We want to get into distribution”, he added.

DSP Pensions, which launched its pension fund management business at fag end of December 2023, has in the eight months (January 2024- August 2024) this calendar clocked assets under management of ₹ 577 crore. Of this, about ₹ 250 crore is invested in equity and the rest in debt portfolio, Bhagat said.

On its equity portfolio, DSP Pensions has in the last eight months clocked return of 25 percent CAGR and the return on the debt front being 7.6 percent CAGR.

Asked about growth aspirations, Bhagat said he wants DSP Pensions to ramp up its AUM to ₹ 1 lakh crore level in the next ten years. In ten years from now, Bhagat expects the overall NPS assets in the  pension industry to grow to about ₹ 60 lakh crore, which is the current mutual fund industry size. Currently, overall NPS assets stood at about ₹ 12.86 lakh crore as of August 16.

A PoP licence would enable DSP Pensions to reach out to mutual fund distributors to distribute the NPS products to retail customers, also leverage its parent’s network (DSP Group) for corporate NPS and expand its footprint. 

“We want to reach out to common people through MF advisors and distributors. That is where we will see a game changer. We can start distributing NPS through them once we get a PoP licence”, Bhagat said.

“We have started engaging with MF distributors to talk about NPS, how it is better. Given that we have significant number of MF distributors associated with DSP MF, we will engage with them more actively as and when we get a licence”.

He highlighted that Pension space is exciting given the opportunities. There is also an encouraging signal from the government that NPS is future and they want the society that is pensionable and financially independent, Bhagat added.

“In term of fund performance, in short span of eight months we have given exceptional fund performance in both debt and equity. Our funds are performing the best in industry. Our investment framework is robust”, Bhagat said. 

“We are establishing ourselves in the market and growing the way we expected ourselves to do”.

Bhagat also asserted that DSP Pensions would continue to be a digital company and had no plans to establish physical branches across the country.