MFs seek entry into pension market, approach Sebi

MFs seek entry into pension market, approach Sebi

New Delhi: The mutual fund industry has approached market regulator Sebi to allow entry into pension product market, in a bid to garner long-term funds.

Currently, pension products are offered by only insurance firms and Pension Fund Regulatory and Development Authority (PFRDA).

“AMFI has made a presentation to Sebi for allowing asset management companies to raise funds through pension products," sources said.

Industry body Association of Mutual Funds in India (AMFI) is of the view that this would help in penetration of pension product as well as raising stable assets for the industry.

“The MF industry wants to launch pension products with annuity features so as to provide the benefit of retirement savings to customers," sources added.

In its presentation to Sebi, AMFI has said that since the asset management companies (AMCs) already have experience in managing investor money, it should be considered for entry into the pension fund market.

The Rs7.43 trillion mutual fund industry, which has been riddled with sagging fund inflow after entry load was scrapped 2009, is lobbying hard for the entry into pension products market to boost the percentage of stable asset in the total corpus.

In the United States about 68% of the households own mutual fund products through the pension route, perhaps through the pension reforms that took place there.

Last month, Sebi chief U. K. Sinha had said that the AMCs should look into penetration into the pension fund market and start selling such plans.

Sources said the modalities of the right product mix and balanced investment in debt and equity is being worked out by the industry.

“We are working out different investment options and also regulatory aspect of the product," they added.