INDIA - The Indian Government has decided to kick-start the pension reforms and plans have been finalised to establish the pension regulatory authority - Pension Funds Regulatory and Development Authority (PFRDA) - by the end of this year.
U. K. Sinha, joint secretary in the Union Finance Ministry, said the Government might relax the minimum number of licences for pension funds from the proposed six.
The minimum number of players need not be six but the final count will be decided by the pension regulator in due course. But the key parameter for allowing private players will be based on the costs for managing these assets.
“We will announce a set of eligibility criteria for bidding for these licences but the number of licences will be fixed by the regulator,'' he said.
Bids will soon be invited for floating a central record-keeping agency CRA, which will be the key authority for handling pension accounts. This agency, which will essentially work like a depository, will manage the accounts of individuals in an electronic format and will function as the main interface with the account holders.
We hope to put in place the regulatory body through an executive order by the end of the month. But the earliest the contributory system can be put in place would be in December, finance ministry sources said.
Officials also said that the guidelines for fund managers will be a mix of those in place for insurance companies and mutual funds. They added that no decision had been taken on the extent of foreign investment level that will be permitted in the sector.
The cabinet also decided to permit each pension fund manager to offer three schemes – safe, balanced and growth.
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