The Hindu Business Line : Private PF trusts may be required to get professional advice

Norms being framed
Finance Ministry is in the process of finalising investment guidelines for non-governmental superannuation funds
Revised guidelines to allow non-government provident funds greater exposure in the stock markets.

K.R. Srivats

New Delhi, Aug 5 Fund management in private sector provident fund trusts may get a more professional touch on the investment side if a proposal before the Finance Ministry was to find acceptance among policymakers.

The Finance Ministry is “seriously” considering a proposal that would mandate non-governmental superannuation trusts of certain corpus size, say Rs 50 crore, to necessarily have an asset management company or professional advisor.

“Often trusts are created to manage private sector provident and superannuation funds. But these are not managed by people as a full time job. However, it is on this trust that depends the financial sustainability in old age of a lot of people”, Dr K.P. Krishnan, Joint Secretary in the Finance Ministry, said at an industry event here today.

Dr Krishnan felt that the concept of professional advice should not merely be restricted to individuals. “In the case of India, institutions that are managing large corpus of funds perhaps need lot more of professional advice. Lot of individuals’ livelihood and financial decisions are taken by people who are not necessarily professional”.

It may be recalled that the Finance Ministry had sought response from public and various stakeholders on the draft investment guidelines that it had proposed for non-governmental superannuation trust funds. The suggestion on parking the private sector superannuation funds with an asset management company came as part of the responses to the proposed investment guidelines.

Meanwhile, Dr Krishnan said that the Finance Ministry was in the process of finalising investment guidelines for non-governmental superannuation funds and these would soon be issued after getting the consent of the Union Finance Minister, Mr P. Chidambaram. He, however, made it clear that the new guidelines would not deal with the suggestion on having an asset management company.

“We will go ahead and issue the investment guidelines. Separately a call has to be taken on the issue of getting more professional advice,” Dr Krishnan later told reporters.

The investment guidelines for private sector provident fund trusts are put out as a requirement under Income Tax Act by the Finance Ministry.

Under the revised investment guidelines, the Government proposes to allow non-government provident funds, superannuation funds and gratuity funds greater exposure in the stock markets.

It is proposed to allow these funds to invest up to 10 per cent of their portfolio in shares of companies that have an investment grade debt rating from a credit rating agency. Moreover, the investment can also take place in shares of BSE Sensex and NSE Nifty companies and equity linked schemes of mutual funds.

Related Stories:
Trustees ‘fiduciary responsibility’ to be highlighted in non-govt PF norms

More Stories on : Social Security | Investments

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page