The Hindu Business Line : ING keen on pension foray, ready to wait

Global financial powerhouse ING Group has indicated that it was prepared to wait for a longer time for making investments in the Indian pension market.

Speaking to Business line, the ING Group's Member of the Executive Board, Dr Alexander Rinnooy Kan, said, "We are prepared to invest significant amounts in to India. Capital will not be a constraint. Let the statutes and the regulatory guidelines be ready."

Dr Kan, however, declined to give any figures for capitalisation since the regulatory guidelines were not ready. The Pension Fund Regulatory and Development Authority Bill was still awaiting Parliament clearance.

Delays expected

But he said, "Delays in pension reforms are expected, since this has happened all over the world." However, he added, that the ING Group was willing to wait since India and China are seen as big markets for the group. The ING group is among the largest pension providers in Europe. He said that transition from the current regime of defined benefit to defined contribution was likely to take time. Currently only the Government and semi-government sectors have clear pension schemes. These schemes are mostly defined benefit schemes. But governments both at Centre, State and public sector companies have begun migrating to defined contribution scheme in view of budgetary constraints.

He said that for making its foray into the country's pension market, ING would leverage on its European linkages. This essentially implied that the company would take advantage of some its corporate links with the European companies or subsidiaries/collaborations operating in the country.

However, pension schemes are already available through the ING Vysya Life Insurance Company Ltd. One such product is branded as the "Best Years Retirement Plan". The scheme offers a guaranteed return to the investors. Consequently, ING raised the capitalisation in its life insurance company to Rs 440 crore from Rs 390 crore late last year.

Satisfactory growth

Mr Kan said that the group was satisfied with the growth in the domestic insurance business. "We are not making any forward looking statements, but suffice to say that a double digit growth in business is in order," he said. He added that the growth in the business was net of attritions. This implied that some delinquencies in policyholder premium payments.

He said that such delinquencies were low in India, since the country was on the growth phase. Typically high level of policyholder defaults in premium commitments were in countries that faced economic down turns. "That situation does not exist in India," he said.

ING Vysya Life has shown a premium growth of 112 per cent during the first 10 months of the financial year. Premium accretion April to December this FY was Rs 174.06 crore powered largely by unit-linked policies. During the same period the company issued 83,845 policies an 8 per cent increase on the year-on-year basis.