Calcutta, Aug. 27: Promoters of pension fund management companies may not have to stump up all that much cash after all.

The Pension Fund Regulatory and Development Authority (PFRDA) has recommended that the minimum base capital for these companies should be less than the Rs 100-crore limit set for insurance companies.

The pension fund regulator is also in favour of allowing more than one public sector fund manager in the pension sector.

Both recommendations are part of the draft regulations that have been drawn up for the new pension scheme that is being formulated.

“We have not stipulated the minimum base capital requirement for the pension fund management companies and kept it open for suggestions in our draft recommendations. However, such capital shall be less than that the stipulated Rs 100 crore required for insurance companies,” said D. Swarup, chairman, Pension Fund Regulatory and Development Authority (PFRDA). He was speaking on the sidelines of a seminar organised by the Bengal Chamber of Commerce and Industry.

The authority will release the draft regulations within the next 10 days for public opinion and feedback, Swarup added.

The draft norms will cover issues like the number of pension fund managers, central record keeping agencies and point of presence among others.

Swarup hoped that the pension bill would be placed before Parliament in the winter session.

“We do not see any reason why the number of public sector pension fund managers should be restricted to one. The expertise and experience of entities such as Life Insurance Corporation, State Bank of India and Punjab National Bank is difficult to match,” he said.

Moreover, PFRDA does not want to restrict the number of fund managers in the pension sector. “As long as the managers comply with the regulations and guidelines, we do not see why there should be any restriction on the number of pension fund managers. We have, therefore, not placed any cap on the number of managers in the draft recommendations,” said Swarup.

However, the pension regulator agrees that the foreign investment in pension funds should be capped at 26 per cent as in the case of the insurance industry.

PPF phaseout

Swarup also said the public provident fund (PPF) should be phased out over a period of time after the introduction of the new pension scheme.

“A committee headed by Rakesh Mohan has already recommended the phasing out of PPF once the new pension scheme is introduced,'' he said.

PPF scheme offers a high administered return to the investors and anybody can invest in it.

“Any pension scheme which is not covered under any statute of the country will come under purview of PFRDA,” Swarup said.