Irda chief favours more equity exposure for pension funds

Our Bureau

Mumbai, Aug 24: THE Insurance Regulatory and Development Authority (Irda) chairman N Rangachary has favoured a greater equity exposure for the pension fund players on the investment of part of pension fund corpus.

‘‘We agree with the sentiment that there should be freedom to invest in a manner, a subscriber (to a fund) wants it, with disclosure of credit risks with scope for churning out,’’ Mr Rangachary said adding that investing more in government securities is not a desirable trend and the current state of equity market should not be generalised.
The Irda chief said returns must be maximised and investments of corpus should not turn into a fixed asset. Mr Rangachary was addressing a seminar on pension reforms organised by the Indian Merchants’ Chamber (IMC) here on Friday.

Mr Rangachary, who is working on a pension report for the ministry of finance also advocated a minimum entry capital norm for pension fund managers. The minimum amount required for new insurance players was to deter those who lack a long term commitment, from entering pension fund management. ‘‘We would want to keep out those who wish to experiment,’’ he added.

‘‘We expect the players to be credible in fund management and trusted which will be carefully chosen by the concerned pension authority and the choice and selection of players by any authority for pension funds would depend on a track record and performance, he said adding ‘‘Irda favours a single unified authority.’’

Asked about the ceiling on issuing licenses, he said: ‘‘Our belief is that there should be no limitation on the number and the guidelines for entry norms should be framed.’’

Mr Rangachary said:‘‘There is a view that the licenses should be reviewed after three to five years for performance or can be auctioned as suggested by Oasis report prepared by the Dave committee.’’ This should be the second best choice as work related would be beset with complications, he added.