The Hindu Business Line : Private fund managers for pensions ruled out

New Delhi, March 7 Even as the private sector mutual fund managers are keen to get a slice of the New Pension System (NPS) cake of Government employees, the Centre has made it clear that fund management of such pension savings would continue to vest with the three public sector sponsors and that it was not looking to expand the number of fund managers for now.

The Finance Minister, Mr P. Chidambaram, said that the question of appointing more fund managers did not arise for now as the pension savings under NPS was currently a “small amount” and they can be managed by the three public sector fund managers already appointed by Pension Fund Regulatory and Development Authority (PFRDA).

He was responding to a suggestion from Association of Mutual Funds of India (AMFI) Chairman, Mr A.P. Kurien, at a post-Budget industry gathering here on Thursday, that fund management of savings under NPS be extended to all mutual funds and not confined to public sector mutual funds alone.

Employees covered

As on February 1, 2008, about 2.85 lakh employees were covered under the NPS. An amount of Rs 1,177 crore, including the Government contribution and interest component, has been credited into the pension account. Nineteen State Governments have also notified similar schemes for their new recruits.

The PFRDA had appointed three public sector sponsors for managing the corpus under the NPS. These are State Bank of India, Life Insurance Corporation, and UTI Asset Management Company Pvt Ltd. They have incorporated the pension funds as companies under the Companies Act, 1956.

Investment route

The entire architecture of NPS is expected to be operationalised by May 31. The accumulation and contribution of subscribers of NPS would be invested as per the investment guidelines prescribed for non-government provident funds. An alternative option of investing 100 per cent of the corpus in the Government securities would also be available to subscribers, official sources said.

NPS was introduced by the Government from January 1, 2004 for the new entrants to the central government service, except to the armed forces of the Union. The main feature of the NPS is that it is based on defined contribution.

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