The Hindu : Business : Pension fund managers to be named by June

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Wednesday, Apr 11, 2007
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Pension fund managers to be named by June

Special Correspondent

NPS will provide sufficient choice of instruments

— PHOTO: KAMAL NARANG

FOR A RAINY DAY: (from left) D. Swarup, Chairman, PFRDA, Umraomal Purohit, General Secretary, Hind Mazdoor Sabha, and Norman R. Sorensen, President, Principal International, at a conference on Pension Reforms in New Delhi on Tuesday.

NEW DELHI: The Centre has authorised the Pension Fund Regulatory and Development Authority of India (PFRDA) to appoint a record keeper and select fund managers from the public sector to herald the New Pension System (NPS) that has been hanging fire for the last two years.

Announcing this at a conference on pension reforms here on Tuesday, PFRDA Chairman, D. Swarup, said: "The Pension Bill as modified by the Standing Committee of Parliament has been delayed because of the insistence of a mere 10 per cent of the political spectrum on a guaranteed replacement rate for employees of the civil services."

Issue of guarantee

Mr. Swarup noted that in any case, since the civil services accounted for barely three per cent of the workforce, the Government would have to take a call on whether there was sufficient justification to hold back reforms which were expected to benefit millions of workers in the unorganised sector.

The Centre, he said, was of the view that such guarantees could be bought by investors from fund managers and, therefore, there was no question of assuring guaranteed returns from the government exchequer. Informing the gathering that the National Securities Depository Ltd. (NSDL) had been identified as the Central record keeping agency, he said: "we intend to appoint two or three fund managers who are likely to be in place by end-May or early June." Mr. Swarup said the NPS would provide investors with a sufficient choice of pension fund instruments with full flexibility to choose their fund managers.

For the NPS to succeed, Mr. Swarup said, it was imperative to have an equitable tax system in place.

The NPS would be optional and it was expected to lead to job mobility and switching.

Rupchand Pal, member of Parliament, pointed out that the left parties were not against pension reforms per se, but would like reforms to be "fair and equitable" for all. He underscored the need for homegrown solutions in pension funds and the financial sector and stressed on long-term sustainability.

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