The finance ministry is in the process of finalising the investment guidelines for the non-government super-annuation funds.
Suggestions have been made that the private sector super-annuation fund, which goes towards the post-retirement pension payment of private sector employees, should necessarily have a professional adviser, said KP Krishnan, joint secretary (capital markets), ministry of finance on Tuesday.
“It has to be decided that any corpus above a stipulated amount has to be managed by professionals,” said Krishnan at the Financial Planning Congress in New Delhi. He laid emphasis on the importance of creating a prudent default option for the fund management.
“Even in countries with high financial literacy, more than 75 per cent of individuals who form a part of defined contribution, opt for default option,” said Krishnan. “By that account, I think that a case for defining a default option intelligently is self evident.”
The corpus of the super annuation fund, however, is not clear, as there is lack of a centralised data on that.
In the wake of the developments in the financial sector, Krishnan sees the need of regulatory convergence. “Investment advisers are not confined to one sector in particular, but the regulators are focused on individual sectors,” he said. “I see an audit of regulatory impact also coming up.”
Meanwhile, an official speaking on terms of anonymity, said that the PFRDA bill is most likely to be moved in the monsoon session. “The official amendments are ready and are waiting for the political move,” he said.
There have been certain amendments suggested to the draft bill and some of them are likely to be taken up. The first amendment is that there will be an option D, the default option, which will offer risk-free investments and the money will be invested only in government securities. The investors, however, will have the choice to select from the four available options.
Another likely amendment is that the investors will be allowed to withdraw money on the same conditions as applicable with the provident fund. The third suggestion to be taken up is that the money can’t be invested in the overseas market.