The pension sector is expected to become the largest financial sector in India in the next five years and there will be a separate law for the sector, a top finance ministry official said on Tuesday.
"Over the next 3-5 years, the pension sector will be the largest sector in the country," U K Sinha, joint secretary (capital markets and pension), said at a seminar organised by the Associated Chambers of Commerce and Industry in New Delhi.
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Considering the importance of the sector, there would be a separate law governing pension funds. However, he did not specify as to when it would be in place.
Pension funds would be allowed to invest overseas also and there would be minimal restrictions on investment strategies of the fund managers, he said.
The move to open up pension sector follows suggestions from Old Age Social and Income Security report, which suggested that there should be defined contribution scheme in place of defined benefit scheme considering the mounting pensions liabilities of the Centre.
The Union Cabinet had recently approved setting up of the Pension Regulatory and Development Authority and contributory scheme for the government officials to start with.
Sinha had earlier said the appointment of an interim pension regulator and the launching of the new contributory pension scheme were expected within five months, through which about 55,000 government employees were expected to join the scheme, even as Labour Minister Sahib Singh Verma expressed concerns on several provisions in the proposed scheme.
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