Mumbai, Feb 1 (UNI) Expressing confidence that the Pension Fund Regulatory and Development Authority (PFRDA) bill will be passed in the budget session, PFRDA Chairman D Swarup today said he proposed to allow private sector companies as pension fund managers under the New Pension System (NPS).
''This is to ensure greater transparency and competition. At present, only public sector companies like UTI AMC, SBI and LIC are the fund managers, appointed through a process of competitive bidding, under the NPS,'' said Mr Swarup, while talking to reporters on the sidelines of the ''Financial Planning Services: Taking The Next Step'' convention here.
He said, the PFRDA bill is pending in the Parliament for the last three years and most of the concerns of those who have been opposing the bill have been met. ''Opposition to the bill is weaning away and I am confident that the bill will be passed soon, probably during the budget session,'' he said.
Mr Swarup said opponents to the bill wanted to know how the bill would ensure that the investment in pension funds were safe.
They felt that investing pension funds in equity will be risky and wanted the entire investment to be kept in government bonds.
He stated that pension wealth was a long-term saving product, and savings in equity was loss or gain for those who indulge in speculations and not for those who invest for long-term savings. The average return on equity investment was to the tune of 14 to 15 per cent which was excellent, he added.
Further, he said he had written to the Government to ensure preferential tax incentives on pension products, once the bill was passed. He said the PFRDA bill envisages opportunity for greater share in the equity market from 15 per cent to 50 per cent.
Besides these, costs are also lower and added that there were investment options available in pension funds and total safety returns were assured.
Mr Swarup said the Government has permitted PFRDA to implement the New Pension System (NPS) for government employees from June 2008 and the real challenge will be in seeing that the system functions smoothly.
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