SBI, LIC, PNB among 7 applicants

SEARCH FOR PENSION FUND MANAGERS

Seven public sector entities including the Life Insurance Corporation and State Bank of India today submitted expressions of interest to the Pension Fund Regulatory and Development Authority (PFRDA) for becoming fund managers under the new pension system.

Punjab National Bank, Canara Bank, IDBI Capital, the Securities Trading Corporation of India and UTI AMC are the other financial institutions which have expressed interest. Today was the last day for submission of interest.

The regulator will finalise a list of companies eligible to become fund managers by May 31. The request for proposal to the eligible sponsors will be issued on June 11. The selected firms will be required to submit their bids in two-three weeks.

"The process of appointment of fund managers will be completed by July 20," PFRDA Chairman D Swarup said.

A maximum of three public sector fund managers are likely to be appointed under the scheme, which is at the moment open for employees of the central and state governments.

"There is tremendous growth potential in the pension business," said an SBI official.

This is a big leap forward for the subscribers to the new pension system, which was made operational from January 1, 2004.

At the moment, funds totalling around Rs 1,700 crore are being utilised by the government and a fixed return of 8 per cent per annum is given to the subscribers. Since 2004, around 5,00,000 employees of the central and state governments have joined the scheme.

The returns are expected to be much higher under the interim investment pattern that may allow 5 per cent of funds in equity and 10 per cent in equity-linked mutual funds. However, the returns will depend on the income generated by the corpus.

According to the primary information memorandum of the PFRDA, the selected sponsors will have to incorporate the pension fund as a separate public sector company in which direct and indirect foreign investment will not exceed 26 per cent.

Due to opposition from the Left parties, the PFRDA Bill is pending in Parliament. The Left parties are demanding a guaranteed return to subscribers and opposing foreign investment in pension funds.

Last month, the regulator had appointed the National Securities Depository Ltd as the central record-keeping agency for managing back-office and issuing a unique permanent retirement account number to each subscriber.