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| Pension reforms help channelise savings for investment |
| Press Trust of India / New Delhi Jul 02, 2009, 16:34 IST |
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Seized of the challenges faced by the PFRDA, the Economic Survey today said the success of the pension reforms will help in facilitating the flow of long-term savings for investment and fund for infrastructure development.
It would also help the government to fund its pension liabilities, said the Survey tabled in Parliament.
"PFRDA faces the challenge of covering the unorganised sector under the New Pension Scheme (NPS), empowering the subscribers to take appropriate investment decisions based on their risk and return profile, provide safety and optimum returns, and to improve financial literacy levels," it said.
The pension sector reforms were initiated in India to establish a solid and sustainable social security arrangement in the country against the backdrop that only about 12-13 per cent of the total workforce was covered by any formal social security system, it said.
The NPS, it said, which was introduced by the government in January 1, 2004 for new entrants to the central government service, except armed forces, was to be extended gradually to the remaining 87 per cent of the total workforce on the voluntary basis.
The government introduced the NPS for all citizens from May 1, 2009.
For the managment of fund generated by NPS for all citizens, the intrim pension regulator PFRDA has appointed six fund managers.
These fund managers include UTI Retirement Solutions, SBI Pension Fund Ltd, ICICI Prudential Life Insurance, Reliance Capital AMC, IDFC AMC and Kotak Mahindra AMC.
PFRDA appointed 23 entities as Points of Presence (POPs) that includes 17 banks.
Among the banks, SBI and its six associates, Union Bank of India, Allahabad Bank, Oriental Bank of Commerce, IDBI Bank have been appointed as POPs.
Private sector lender like ICICI Bank, Kotak Mahindra Bank while foreign bank Citibank will also function as a front office for the New Pension System for all citizens other than government employees.
Other entities which will do front office job like selling of pension products and collecting premiums include LIC, UTI Asset Management Company, Reliance Capital and Bajaj Allianz General Insurance.
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