SBI, LIC shortlisted by PFRDA

The Pension Fund Regulatory and Development Authority (PFRDA) today invited bids from four select public sector financial institutions including State Bank of India (SBI) and Life Insurance Corporation (LIC) for appointing pension fund manager under the new pension system.

The last date for submission of commercial and technical bids is July 4, 2007.

"The request for proposal was issued today to SBI, LIC, IDBI Capital and UTI AMC," said Gyan Bhushan, officer on special duty, PFRDA.

Of the seven, these four financial institutions had qualified the eligibility criteria set by the regulator for pension fund manager. Punjab National Bank, Canara Bank and Securities Trading Corporation could not qualify.

Based on the bids, the final evaluation will be made for appointing 2-3 fund managers by July 20 to manage the corpus of the new pension system, made operational since January 1, 2004.

About 5,00,000 employees of both central and state governments have joined the system since 2004, leading to accumulation of Rs 1,700 crore in the pension corpus.

After fund managers are appointed, they will invest these funds professionally in various equity and debt instruments subject to limits in the interim investment pattern to be notified. The returns are expected to be higher under the interim investment pattern. Currently, the funds generate a fixed return of 8 per cent per annum.

The defined contributory system is mandatory for new recruits to the central government except the armed forces.

The monthly contribution from the employee is 10 per cent of the salary and dearness allowance, which is matched by the government.