Says delay in approving new pension schemes is due to late product filing by firms.
The Insurance Regulatory and Development Authority (Irda) today attributed the delay in approving new pension schemes, which have led to none being available in the market, to late product filing by companies.
“Irda had issued guidelines for pension products (on) November 8, 2011, and insurance companies were required to withdraw all products not conforming to the guidelines with effect from January 1, 2012. In accordance with this circular, insurance companies had filed 22 revised products as on date, of which 21 were filed only in December 2011 and of which the largest number were filed in the last week of December,” said chairman J Hari Narayan, in a statement.
Irda also clarified that the assured benefits mentioned in the guidelines meant a ‘non-zero’ rate of return to be guaranteed at the time of vesting, death benefit and surrender value.
Earlier in the week, Business Standard had reported that the regulator was yet to approve any new pension plans based on the new guidelines, while those based on the earlier rules had to be withdrawn by January 1. Leading companies said they’d requested the regulator to allow them to continue with the existing products till the new ones were approved. However, Irda refused.
The controversy surrounding pension plans started in September 2010, when Irda came out with new regulations on such products, mandating a minimum annual guarantee of 4.5 per cent. As a result, the sales of pension plans plummeted to Rs 600 crore during the first six months of the current financial year, compared to Rs 17,000 crore in the same period a year before. Consequently, in the revised guidelines of November, it withdrew the 4.5 per cent guarantee clause, but said there must be some guarantee element with the plan, either by offering positive returns on premiums paid during the contract or assured maturity benefits.
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