Irda Talks Against Pension Regulator
The Insurance Regulatory and Development Authority (Irda) has argued against the creation of an independent regulator to control the pension system in the country by taking the line that there should not be profligacy of institutions and that the financial system costs must be controlled.
In its report on pension reforms in the unorganised sector submitted to the union finance ministry last month the IRDA reasoned that out of the four key functions --- contribution inflows, record keeping, money management and benefit payouts --- of the pension system, the last module, namely, paying of the annuity to the subscriber contributor will have to be exclusively handled by a life insurance company, which is regulated by it (the Irda).
"Nearly 50 per cent of the work of an integrated pension system is thus taken care of by the Irda's supervisory regime. The only items that require to be monitored are regarding recognition of the various players, their accounting concepts and management of investment," the insurance regulator said in the report.
"We are very confident that the present set up of the Irda does have enough capacity and capability to look after these areas of work," it submitted.
It may be recalled that the 'Old Age Social Income Security' project commissioned by the ministry of social justice and empowerment had, in its report submitted in January 2000, recommended the creation of a pension fund regulator, the Indian Pensions Authority, which is not contaminated by any other regulatory processes.
The Irda further buttressed its argument by pointing out that there was an overwhelming consensus in the International Association of Insurance Supervisors (IAIS) that since both insurance and pension are regulated by the same regulator in most of the countries, due to similarities in the sectors, there should be synchronous development of regulation in both these areas.
Therefore, steps are being taken at the level of both the IAIS and the International Network of Pension Regulators and Supervisors to come together and have common approaches to the various issues, the regulator averred.
"This is now an international development which we recommend should influence the national developments in our country," it said.