Pension regulator allows central govt employees to switch pension fund managers

Competition for managing India's INR1.61tn ($22bn) central government pension pool is set to intensify after a change to rules announced on 6 October that allows pension fund subscribers to switch their accounts to a pension fund manager (PFM) of their choice.

This latest move follows last year’s changes under which the Pension Fund Regulatory and Development Authority (PFRDA) allowed central government employees, who number around 2m, to pick their own PFM from among eight fund managers under the National Pension System (NPS). Government employees could also decide the type of funds they want to invest in and how much to invest within conditions set out in the NPS, reported Live Mint.

The eight PFMs manage three plans—conservative life cycle fund with equity capped at 25%, moderate life cycle fund with equity capped at 50%, or 100% allocation to government bonds.

“This is a big opportunity for private sector pension fund managers. With time, state governments will also give the choice to their employees as the UP and Bihar governments have done, opening up that market to us also. Private pension fund managers’ performance has also been very good; so, there is every reason for government employees to explore switching to them," the CEO of a private sector pension fund said on condition of anonymity. “The average pension pot of a central government employee is INR700,000-800,000.”

Source: Asia Insurance Review

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