The interim Pension Fund Regulatory and Development Authority on Friday said it will appoint a Central Record-keeping and Accounting Agency and give licence to six pension fund managers to start the new pension regime by December this year.
"We will initially allow six pension fund managers, including one PSU," PFRDA chairman Vineeta Rai said on the sidelines of a tax conference, hosted by the Associated Chambers of Commerce and Industry in New Delhi.
The regulator had earlier decided to allow about 10 pension players, including one PSU.
Leading fund management companies like Life Insurance Corporation of India, UTI Mutual Fund, ICICI Prudential, HDFC Standard Life, DSP Merrill Lynch, Templeton, Principal-PNB-Vijaya Bank, Birla Sunlife and Aviva are in the race for managing pension funds of over 300 million people in both the organised and unorganised sectors.
All the players are waiting for the final guidelines including the extent of foreign direct investment for qualifying as a pension fund manager.
PFRDA is expected to spell out the guidelines only after the new government assumes office.
Rai said the interim regulator will appoint a CRA first and then start giving licence to the pension fund managers.
Leading despositories like NSDL, CDSL, UTI ISL, Stock Holding Corporation of India and banks are in the race for the coveted job of CRA.
PFRDA had announced a draft guideline and invited public comments for the new regime which envisages a market-linked pension scheme.
"We hope to put in place everything within the next 30 weeks," Rai said.
Employees may get tax breaks for their investment in the new pension schemes.
A finance ministry official said the government may adopt the EET model -- exempting the funds during contribution and accumulation and taxing it during the withdrawal stage at the prevailing tax rate.
Official sources indicated that the PFRDA may prescribe a minimum capital requirement of Rs 50 crore (Rs 500 million) for pension funds.
Each pension fund manager will have to come up with three schemes -- a growth plan where equity investment could be as high as 60 per cent, a balanced plan where debt and equity will have equal share, and an income plan which would be debt-oriented.
The new pension schemes would not offer an assured return, sources said, adding the net asset value of the schemes would have to be disclosed daily as it is done by mutual funds.
Employees will have the choice of switching from one scheme of a company to another scheme of another company depending on the returns the funds offer.
The PFRDA may stipulate stiff penalties for fund managers not adhering to its guidelines and for malfunctioning that may lead to erosion in the value of long-term savings of millions of employees, they said.
At present, only 11 per cent of the population are covered by a pension scheme.
The new pension regime intends to bring in a majority of the population including those in the unorganised sector under the social safety cover.