Sun Life may let MF, risk arms vie for pension pie

Life insurers are confused about their role in the pension sector. With the Centre expected to allow only nine players, life insurers and mutual funds are vying to be one of the eight since one slot may be reserved for a public entity.

In what could be a first for India, the Canada-based Sun Life Financial, through its joint ventures with the Aditya Birla group, is not averse to its mutual fund and life insurance ventures, if allowed under the regulations, to compete with each other in the pension business.

Gary M Comerford, Sun Life Financial vice-president and general manager (India), said ultimately the choice should be left to the customer in terms of which product he wishes to buy or with whom he prefers to interact.

Some financial houses such as ING Vysya and Allianz are streamlining their plans for the government pension business.

While most players are trying to see how best their mutual fund and life insurance arms can work together to offer the product, Birla Sun Life group is not averse to internal competition between its arms.

Sun Life Financial CEO and Birla Sun Life chairman Donald Stewart, who was in Mumbai today, said the idea is to provide retirement savings to individuals through a vehicle that best fits regulatory needs.

CEOs of the life insurance industry met the pension regulator and government officials on Monday seeking a clarification on their role in the sector.

"We are waiting for regulations to come out first before we can decide on the appropriate strategy to venture into pension business. However, we believe in letting the consumer make the choice," Comerford said.

Around the world, Sun Life has internal competition between its MF and life insurance arms in pension business.

"Our MF in Canada manufactures and offers a retirement savings product (RSP). This is as opposed to our life insurance company offering a registered retirement investment fund (RIF), which is more like an annuity. While RSP invests more in equity-linked products, RIF is more traditional in its investment decisions as it looks at guranteed interest products," Comerford said.