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Indian Government may allow
than six pension funds ,
June 10, 2003
New Delhi - The Centre may
allow more than six companies to set up shop in the pension funds sector.
The Cabinet note being moved by
the finance ministry has inserted a provision that there will be six or
more pension funds in the new sector.
The provision is important
since several domestic mutual fund companies as well as fund management
companies from abroad have sent representations to the government against
restricting the number of pension funds.
The ministry had earlier
restricted the number of pension funds to six because allowing too many
options could create problems of choice for the depositors.
People joining government
services this October will have to make their choice soon after their
recruitment. With each company allowed to hawk three types of funds, there
will be 18 options to choose from, with just six players.
However, finance ministry
sources said the new clause was inserted in the note to show that the
government was willing to increase the number of companies entering the
The number of annual recruits
to government services is about 33,000, excluding the defence services.
Meanwhile, the railways have
decided to accept the redefined contribution-based pension plan for their
Senior officials of the railway
ministry said they would accept the notification to be issued by the
department of personnel and training.
The Cabinet is expected to
approve the pension scheme by this month. Once it is approved, the finance
ministry will issue the relevant notification to set up the Pension Fund
Regulatory and Development Authority, which will seek registration of fund
managers to create pension products for government servants as well as
employees in the unorganised sector.