New Delhi: India will allow only state-run firms to manage a new pension fund for government employees, the finance ministry said on Monday, a day after communist allies of the ruling coalition objected to the reform process.
Firms in which the government owns at least 51% can qualify for the pension fund managers job, the ministry said in a statement.
“Direct or indirect foreign investment in the pension fund manager, if any, shall not exceed 26% of its paid-up share capital,” it said.
Applicants must have experience of more than five years and should be presently managing assets of more than 100 billion rupees, it said.
The ministry said foreign or private firms would not be eligible to apply for the new pension fund, estimated at more than Rs15 billion ($370 million).
India has been planning the new pension system since 2004 to reduce its future liabilities and allow employees the option to invest almost half of their pension contribution in equities.
But stiff opposition from communist allies prevented the government to move a key legislation in parliament.
Pending the legislation, India recently decided to allow state-run banks, insurers and asset management firms to bid for the job of managing pension contributions of government staff recruited since 2004.
On May 11, India’s pension regulator -- the Pension Fund Regulatory and Development Authority (PFRDA) -- had invited state-run banks and asset management firms to bid for fund managers job.
The last date for submitting the expression of interest is May 25.
But the communist parties, who lend crucial support to the coalition government, have written a letter to Prime Minister Manmohan Singh conveying their disapproval to the PFRDA’s move.
“We request you to put on hold the process of appointing pension fund managers initiated by PFRDA,” the left parties said in the letter on Friday.