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India: Pension norms under attack

By Vinu Lal

The Times of India, May 21, 2003

MUMBAI - Private players are not very happy with the government’s steep norms for entering the liberalised pension market. And, for the Rs 300,000-crore plus pension market, the reforms agenda is poised to be turbulent.

Even as the finance ministry issued a directive two weeks back on pension reforms, a nation-wide campaign against the skewed entry norms for private participation is building up.

UK Sinha, joint secretary of finance, recently issued a directive, indicating the ways of introducing pension reforms, based on the Old Age Social and Income Security (Oasis) report.

The crux of the issue is the government’s move to restrict private players to six and the entry norms governing these players. In the new system, there would be separate AMCs which would manage the funds of the pension schemes.

However, it is not clear whether the role of the pension fund would be limited to mobilise funds and the responsibility of its management would be segregated to other players.

The government argues that this would bring in more transparency. But the market players feel otherwise.

‘‘Private participation should be allowed in the lines of an open market policy, while the government should specify the maximum costs permissible for floating pension plans. The current proposal of bidding is skewed, as it does not cover aspects like credibility of the sponsor, track record,’’ said AP Kurian, chairman, Association of Mutual Funds of India.