PSUs may get nod to handle pension funds / Dec 20, 2005
From Indiapensions
PSUs may get nod to handle pension funds
New Delhi: A battery of high-power public sector fund managers could take the field in the proposed New Pension System (NPS), with the Pension Fund Regulatory and Development Authority (PFRDA) taking a positive view on all the State-owned entities that have till date expressed interest in handling pension accumulations.
Among the PSUs that have approached the interim PFRDA to express their intent of seeking a Pension Fund Manager (PFM) licence are SBI, LIC, and Punjab National Bank.
UTI Mutual Fund has also expressed its intent to participate as a fund manager in the NPS, though till recently it had not formally approached the regulator.
Under the PFRDA Bill, the regulator would be mandated to licence "at least one" public sector fund manager under the NPS.
However, the authority is of the opinion that all the PSU entities that have sought to play a role have more than adequate credentials to handle the pension contributions.
"Even for PSUs there would be no limit. Why will I restrict the number of PSU fund mangers? The reach, the manpower, the financial strength of the public sector entities that have approached us is hard to match," D. Swarup, Chairman of the interim PFRDA, told Business Line.
The PFRDA's open mind on the number of PSU fund mangers could go a long way in allaying the lingering concerns of the Left parties that have expressed their fears over pension accumulations being handed over to private fund managers. The choice of opting for private or public sector fund managers would be left to the individual subscribers.
The Government recently decided to incorporate an amendment to the PFRDA Bill to include a clause that "at least one of the pension fund managers shall be a Government company or a wholly-owned Government company or Government companies."
The decision was conveyed to the Left parties at a meeting to iron out differences over the pension reforms.
Earlier, a Parliamentary Standing Committee had asked the Government to incorporate a specific clause that would make it mandatory to have at least one PSU fund manager in the NPS.
The Committee had said that the presence of a PSU entity would be "in the interest of the subscribers."
Though it had appeared that political consensus had been reached on the PFRDA Bill, it now seems that certain issues remain to be ironed out before the Bill gets Parliament's nod.
Besides fears over private fund managers handling pension contributions, the Left parties have also said that there might be a need to ensure minimum guaranteed returns to subscribers to ensure income security in old age.
