The Pension Fund Regulatory & Development Authority (PFRDA) has increased the allocation from the government’s pension fund to Life Insurance Corporation (LIC) Pension Fund in 2010-11, while trimming the allocation to State Bank of India (SBI) Pension Fund.
PFRDA has allocated 35 per cent share of government pension funds to LIC Pension Fund, while the other two pension fund managers — SBI Pension Fund and UTI Pension fund got 33 per cent and 32 per cent, respectively.
LIC Pension Fund has gained six per cent in the fresh allocation. While UTI Retirement Benefit Pension Fund saw a one per cent increase in allocation, SBI Pension Fund’s share has fallen from 40 per cent to 33 per cent.
Speaking to Business Standard, PFRDA’s newly-appointed Chairman, Yogesh Agarwal, said: “The funds are allocated based on their returns. There is not much difference between the three fund managers, so there is marginal variation in terms of allocation.”
The three fund managers will manage around Rs 4,900 crore for 2010-11. “This includes central government and state government pension funds. If you include autonomous bodies and individuals, the total allocation goes up to Rs 5,100 crore. Individuals and others have the option to choose their manager. We have increased the number of subscribers in the last one year,” said PFRDA Executive Director Rani Singh Nair.
Pension funds follow PFRDA’s investment guidelines. According to the norms, 15 per cent is to be invested in equity and 85 per cent in debt.
“Last year, we invested 98 per cent of the total funds in AAA-rated papers and only two per cent in AA papers,” said UTI Retirement Benefits Pension Fund Managing Director and Chief Executive Balram Bhagat.
LIC Pension Fund managed to give more than 10 per cent return in the previous year. The other two returned a bit lower than 10 per cent.
The pension scheme for government employees has been operational for two years now. It rolled out the New Pension Scheme for the unorganised sector last year, that is managed by six fund managers.
