State Pension Funds May Be Allowed to Invest More in indifference

Author yuvamind

New Delhi: India government is considering allowed  state retirement funds to expense more in indifference and opening them up to private-sector management to growing returns, as Prime Minister Narendra Modi seeks to expand the country ' s small pensions exact. Head of the Pension Fund Regulatory and Development Authority, Hemant Contractor, said Reuters he was pushing for state pension funds to be consent to expense up to half of their funds in stocks, up from the current 15 per cent. The pension plans handle mostly state employees ' funds. Finance Minister Arun Jaitley, who wants pension and insurance funds to invest more in indifference and infrastructure, could make a decision as well. The pension savings of about $15 billion overseen by Mr Contractor ' s agency are about just 1 per cent of the Bombay Stock Exchange ' s $1.5 trillion market value. But asset managers expect them to grow four-fold over five years, mainly driven by higher deposits following tax exemptions this year. Mr Jaitley introduced a tax break this year on annual pension contributions of up to Rs 50,000 ($750), a step that could boost enrollments by 40-45 per cent in this fiscal year, Mr Contractor said. PM Modi has also urged the $100 billion state-run Employees ' Provident Fund Organisation (EPFO) to start buying stocks to lift its returns. "There is a broad agreement that state employees should have an option on a par with private workers to invest in equity markets," said a Finance Ministry official, who is involved in the policy process and spoke on condition of anonymity. But most of India ' s workforce is employed in the cash economy and has no formal retirement cover at all. Only about 12 per cent of those in work actually have a pension plan. Funds overseen by the PFRDA have returned more than 10 per cent a year since it was set up in 2004. That beats the 8.5 per cent earned by the EPFO, which invests mainly in government bonds, but barely beat inflation over the same period. Private players see an opportunity in the pension savings of the 60 million state employees who contribute $13 billion of the $15 billion in assets overseen by the PFRDA.
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