Pension sector may come under IRDA

NEW DELHI: Pension sector reforms have been set into motion with the Group of Ministers considering making Insurance Regulatory and Development Authority the regulator for pension sector as well.

Sources said, the GoM is seriously considering that IRDA could be given the responsibility to regulate this new sector. IRDA recently made a presentation before the GoM, which is headed by Planning Commission deputy chairman K C Pant. Indications are that the insurance regulator would be entrusted with the task of coordinating and overseeing activities of the pension sector too.

Sources said, the insurance regulator was ideally suited for monitoring the pension sector as well because of the synergy between both areas. The GoM has observed that there are many similarities between the insurance (specifically life) and the pensions sector both of which depend on actuarial evalutions, sources said.

IRDA had submitted its pension sector report last October drawing out a roadmap to pursue reforms in this sector. While this was not the preliminary report on the pensions side as the Oasis committee and Bhattacharya committee had submitted similar reports on the deregulation of the pensions sector, IRDA’s report was able to link up the insurance and the pension sector.

In its report to the finance ministry, IRDA has suggested minimum capital norms for companies willing to enter this sector. The capital requirement is in the range of Rs 50 crore to Rs 75 crore. This norm will also apply to life insurance companies who are willing to ensure the pension sector through separate asset management companies.

The regulator has also suggested a scheme similar to the current PPF (public PF) where there is flexibility in depositing money removing the compulsion of putting fixed money as in insurance year after year.