Model code of conduct throws a spanner in the works.
The forthcoming general elections have forced the pension regulator to defer the launch of a scheme for non-government employees by at least two months to June.
The Pension Fund Regulatory and Development Authority (PFRDA) had finalised six fund managers and 23 points of presence to collect contributions from investors, so that the scheme could be launched on April 1.
“However, keeping in view the model code of conduct for elections, it has not been possible for PFRDA to continue the information campaign and undertake other preparatory activities as originally scheduled,” the regulator said in a statement.
Apart from the launch of non-government business being delayed, the regulator will also be unable to get the three fund managers for the contributory new pension scheme, which is already operational, to lower the cost of managing funds to 0.09 basis points.
In case of the government’s new pension scheme for employees who joined from January 2004 onwards, the three designated fund managers – Life Insurance Corporation, UTI and State Bank of India – are allowed to invest a maximum of 15 per cent in equities. At present, SBI and LIC charge 3 basis points for the business, while UTI levies a fee of 5 basis points.
In addition, a senior PFRDA official said that the regulator would use the additional time available to get more comments from stakeholders and potential investors before finalising the investment guidelines for the non-government business. In case of non-government investors, where employers are not mandated to put in a matching contribution, the regulator could allow up to 100 per cent investment in debt or the entire contribution can be put into equities, depending on the preference given.
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In addition, investors, who have to contribute at least Rs 6,000 a year, would be allowed to change their investment pattern and fund managers at regular intervals.
The regulator had appointed six new fund managers — UTI Retirement Solutions, ICICI Prudential Life Insurance, IDFC Asset Management Company, Kotak Mahindra AMC, SBI Pension Funds and Reliance Capital AMC — to manage the non-government business.
Asked if the Election Commission had objected to the launch of the scheme, a PFRDA official said that putting out the information at points of presence itself could have created problems though the poll panel had not said so.
“The material will carry the Government of India emblem and so will the cards with the exclusive registration numbers. It could have violated the model code of conduct and we did not want to take any chances,” the official added.
Before the model code of conduct came into force in the first week of March, PFRDA had issued an advertisement which had generated a lot of interest. “There have been a lot of queries and individuals have approached us wanting to know more about the scheme. But we cannot issue more advertisements to even educate them. So, we decided to defer the launch,” the official said.