The Hindu Business Line : April 28 deadline set for pension panel report

THE Parliamentary Standing Committee on Finance has been set a deadline of April 28 to table its recommendations on the Pension Fund Regulatory and Development Authority Bill. In an unusual move, the Lok Sabha Speaker, Mr Somnath Chatterjee, issued this deadline to the committee.

Global pension fund managers, who are eyeing a part of the Indian pension pie, see this as an important sign of the Government's determination to push ahead with pension reforms in the country, despite opposing views on the Bill.

The decision to refer the PFRDA Bill to the standing committee came after the Left parties opposed it. The party viewed the management of pension funds to private players as potentially detrimental to public interest. They also opposed the investment of the funds in equities.

Pension managers see the opposition to the Bill as "unreasonable reactions to the system being implemented; the final beneficiaries of the system would definitely be the contributing population of the country."

The PFRDA Bill, which was introduced in the Lok Sabha on March 21, was to replace the Ordinance issued in December to set up PFRDA, the regulatory authority for pension funds. The delay in passing the Bill, however, forces the Ordinance to lapse. The Ordinance is valid only until April 8.

"While this delay certainly forces a rethink on our time lines, we still hope that we would be able to launch products by November 2005. However, we are not as certain about this as we were at the beginning of this year," Mr Norman Sorensen, President, Principal International Inc, told Business Line.

Global pension players also point out that allowing pension funds to invest in equities not only adds depth to the markets but the scale-up in the size of the corpus is also significant.

Countries such as Chile, Mexico and Hong Kong, which have carried out reforms in the pension market, have been able to quickly scale up on the corpus, and these funds are in turn used to build and develop infrastructure and other essential requirements of the domestic economy, Mr Sorenson added.

Players are also raising concerns about restricting the number of fund managers. A more stringent application policy, with focus on capital adequacy, would be more helpful than a sheer number restriction. Players may make unviable bids to get a licence, they said. In order to ensure sound management of funds, stricter admission procedure would be a better policy, according to these fund managers.

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