PFRDA to appoint 4 fund managers

The Pension Fund Regulatory and Development Authority (PFRDA) will appoint four fund managers over the next three months to manage the new pension fund schemes, D Swarup, chairman, PFRDA, said today.

The appointment would be made through an executive order since it would take time for the PFRD Bill to become an Act. The four managers would be drawn from public sectors companies like State Bank of India, Punjab National Bank and Life Insurance Corporation.

"The government can ill afford to displease its supporters," Swarup said at an Assocham seminar on the pension fund industry. Central record keeping agencies (CRAs) would also be established by the government.

"The finance ministry has empowered us through the issuance of an executive order to appoint CRAs and pension fund managers to cover central and 19 state government employees under the new schemes for which letters of intent (LOI) have been expressed. The date for the response to the LOI's ends tomorrow on Tuesday, February 6," Swarup said.

The government would also be implementing new pension schemes for central government and 19 state government subscribers. PFRDA has created an initial corpus of Rs 1500 crore for the new pension fund, which is expected to offer returns of 14-29 per cent to its subscribers.

"We have recommended to the finance minister to grant Rs 20,000 to Rs 30,000 worth of investment incentives to new pension fund subscribers to develop the pension fund industry.

This will take the limits of income tax exemptions in various schemes from the existing levels of Rs 1 lakh to Rs 1.2-Rs 1.3 lakh," Swarup said.

Over the next two years with the implementation of the new pension schemes, the size of the domestic pension industry will touch Rs 2,00,000 crore.

Currently, in the absence of the new pension scheme, the total fiscal stress both on the central and state governments on account of extending pension benefits to their employees would increase to Rs 1,60,000 crore every year from Rs 75,000 crore, at present.