The Hindu Business Line : LIC likely to be PSU pension fund manager

THE Life Insurance Corporation of India is turning out to be the hot favourite for taking up the mantle of the sole public sector pension funds manager (PFM) under the new pension structure.

"We are thinking of LIC taking the lead as the public sector pension entity," a senior Finance Ministry official said. If finally selected, LIC may have to float a separate outfit for its foray into the pension sector. The public sector PFM has been tentatively named as the Pension Corporation of India.

Though LIC's candidature has been under consideration no concrete proposal has emerged as yet, officials said. Thus, it is could not be ascertained whether the public sector PFM would be a wholly-owned subsidiary or would have equity tie-up between the lead institution with other public or private partners.

Officials said that they were homing in on LIC since it is the only existing public sector entity that has experience in handling pension schemes. The current pension plans offered by LIC are New Jeevan Akshay-I, New Jeevan Dhara-I and New Jeevan-I, besides administering the new pension scheme announced by the Government - the Varistha Pension Bima Yojana.

The Government has decided that the proposed pension reforms will be initiated with one public sector PFM, while the other fund managers would be private sector entities. In its plans for the pension reforms recently cleared by the Cabinet, the Government has not kept any formal cap on the number of PFMs that would be licensed by the proposed pension regulator - the Pension Fund Regulatory and Development Authority (PFRDA).

Initially, the Government had considered placing a cap of a maximum of six PFMs, including the Pension Corporation of India, who would be given licences by the regulatory body. However, though deciding not to propose a cap at this stage, officials have, however, said that once the pension regulator is set a higher cap might be announced.

The Government is currently in the process of constituting the interim PFRDA. The authority would subsequently work out the details of the parameters for licensing the PFMs and would frame detailed regulations for the sector.

According to the schedule worked out by the Ministry of Finance, the first set of pension schemes from the new PFMs would be on offer during the last quarter of the current financial year.

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