The Hindu Business Line : FICCI against cap on pension fund players

THE Federation of Indian Chambers of Commerce and Industry (FICCI) has said that there should not be any cap on the number of pension providers who would operate in the market. ``This would also be against the spirit of free market economy which the country has embarked upon. It should be left to the market forces to determine the size,'' the chamber in its submission to the Finance Ministry said.

On the entry norms and number of players, the chamber has said, ``The role of the pension fund managers (PFMs) envisaged under the scheme would require a higher order of capability and stature.'' On the issue of selection of players, the chamber submitted that the criteria adopted by the IRDA while granting certificates of registrations to insurance companies — market standing of the promoters, past experience in funds management, management integrity, etc may be adopted. It, however, was opposed to bidding on the cost of operations concept. The Pension Fund Regulatory and Development Authority (PFRDA) may decide on the ceiling on the expenses ratio in consultation with the players in the market and bring out regulations in this regard.

The regulations framed should be dynamic and should undergo change depending upon the growth and requirements of the market, the chamber said.

Further, insurance companies as per present law, must continue as the fund managers and annuity providers in the proposed pension system. There is no need of having separate license and capital for the insurance companies as they are already licensed by IRDA for insurance business which includes pension and superannuation allowances and also maintenance of superannuation funds, as per Insurance Act 1938.

On the Central Registry Authority, the chamber said, ``We are of the considered opinion that monopoly would lead to inefficiency and hence it would be preferable to have competition in the form of more than one Registry Authority. The decision to have a single CRA is a derogatory step and we are against this concept.''

For pension market to grow and flourish, consumer education would be crucial. It would be the development duty of the regulator to enhance consumer education in the country. This in the long run would attract consumers to the pension market. On the issue of taxation, the chamber felt that the incentive to save and provide for the retirement should continue and be made more attractive than what it exists today with a ceiling.

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