The Hindu Business Line : BoI, UTI MF sign pact for micro pension plan

CUSTOMISED PRODUCT: Mr U. K. Sinha (left), Chairman & Managing Director, UTI AMC, and Mr M. Balachandran, CMD, Bank of India, at a press conference in Mumbai on Thursday. - Shashi Ashiwal

Mumbai , Aug 3

Bank of India and UTI Mutual Fund on Thursday signed an agreement to provide a micro pension scheme to the bank's Self Help Groups (SHGs). This initiative is under UTI MF's Retirement Benefit Pension Fund.

UTI MF has customised the pension for the bank's SHG members and reduced the minimum amount to Rs 100 per month, from Rs 500 for the normal pension fund, said Mr U.K. Sinha, Chairman and Managing Director UTI AMC.

Bank of India will collect the monthly contribution from the savings of its SHG members for the pension fund. This will reduce the operational cost for UTI MF thereby making it possible to reduce the minimum contribution amount, he said.

UTI MF launched the micro pension initiative in April 2006 in Ahmedabad. The scheme was offered to the members of SEWA and the minimum contribution was reduced to Rs 50 per month.

Bank of India has 75,000 SHGs and an average of 20 members in each group. Therefore, this product could benefit about 15 lakh members, said its Mr M. Balachandran, Chairman and Managing Director..

"We have enlisted about 1,000-1,500 SHGS in Tamil Nadu and will extend it to Madhya Pradesh, Maharashtra and Orissa. We are also hopeful that we can bring in more number of people from urban areas as well," Mr Balachandran said.

The investor will pay the monthly contribution up to 55 years. They will receive pension in the form of periodical income after 58 years.

"This is defined contributed pension and the pension is based on the amount the member contributes. Historically the pension fund has given a return of more than 12.65 per cent since its inception," Mr Sinha said.

About Bank of India raising interest rates, Mr Balachandran said the banks' Asset Liability Committee would meet later this week and take a decision. "If we raise lending rates, we will also hike deposit rates. We have to maintain the balance between cost of funds and cost of lending," he said.

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BoI, UTI MF sign pact for micro pension plan