PFRDA issues clarification on Pension Fund Managers

New Delhi, May 20 (UNI) The Pension Fund Regulatory and Development Authority (PFRDA) today clarified that it had invited Expression of Interest (EOI) only from public sector entities for sponsoring pension fund managers, a decision that has failed to convince the left parties and employees' unions.

Seeking to allay misgivings about the EOI, it said only government entities, such as Central Government companies and public financial institutions in which not less than 51 per cent paid up share capital is held by the Centre or partly by it and partly by one or more state governments can apply.

The PFRDA had issued a Primary Information Memorandum and EOI package for appointment of Pension Fund Managers for the New Pension System (NPS) on May 11. The last date for submission of EOI is May 25.

Recently, reports had appeared in a section of the media that PFRDA proposes to allow foreign and private firms to manage pension funds.

In its clarificatory note, the PFRDA said that in terms of its invitation to submit EOI, no foreign or private firm would be eligible to apply for the pension fund business.

Further, the sponsors, in order to be eligible, must have at least five years' experience of fund management and average assets under management of the sponsors must not be less than Rs. 10,000 crores for the month of March this year.

''Thus, even amongst public sector entities, only those with sufficient experience and financial strength can apply,'' it said, adding that the selected public sector entity would be required to incorporate the pension fund manager as a separate public sector company.

''Both the sponsor as well as the pension fund manager would, therefore, be in the public sector. Direct or indirect foreign investment in the pension fund manager, if any, shall not exceed 26 per cent of its paid up share capital. This is in accordance with the report of the Standing Committee on Finance which examined the PFRDA Bill, 2005,'' it added.

However, top leaders of the left parties today dashed off a letter to Prime Minister Manmohan Singh, requesting him to put on hold the entire process till a final decision is taken on the contentious issue.

''We fail to understand how the Finance Minister has cleared this step when he is fully aware of our strong and continuing objections. The Central and state government employees' organisations have also expressed their opposition,'' they said.

The letter was signed by CPM General Secretary Prakash Karat, CPI General Secretary A B Bardhan, All India Forward Bloc General Secretary Debabrata Biswas and RSP Secretary Abani Roy.

Urging the Prime Minister to put on hold the process of appointing pension fund managers initiated by the PFRDA, they said the funds could instead be placed with the Employees Provident Fund Organisation ''till a final decision is taken on the new pension scheme.'' UNI